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Canada's Trade War with U.S. Escalates Amid Midterm Elections Pressure
Confirmed
In Short: The trade war between Canada and the U.S. has intensified, with both sides imposing tariffs and facing political pressure ahead of November's midterm elections.
Prime Minister Mark Carney stated that Canada is still in search of a durable deal with the U.S. that is in the best interests of both countries. Meanwhile, U.S. Trade Representative Jamieson Greer said, "The ball is in Canada's court," indicating that the U.S. is waiting for Canada to make concessions. President Trump, in a series of Truth Social posts, threatened to halt all U.S. business with Bombardier, a major Canadian company that contributes over C$7bn to Canada's GDP in 2024.
The trade war has become a significant issue in many states, with Trump's policies affecting exports and imports. "You've got Republican candidates who have to be confronted with trade policies against Canada that are making it harder to export stuff to Canada and are making some things really expensive for people in those states to import," a source told BNN Bloomberg. This has led to political pressure on the Trump administration to find an off-ramp from the trade war, which is becoming politically toxic.
The relationship between Canada and the U.S. was upended by Trump's return to the White House, with tensions escalating after trade talks broke down last month. The current trade war began after Trump imposed a series of tariffs on Canadian goods despite having negotiated and praised the North American trade agreement during his first term. If Canada's approach succeeds, it could be used as a template for resisting the Trump administration's trade policies.
Carney has said he wants to diversify Canada's trade away from the U.S., but the situation remains tense. "In light of trade action threatened by the United States earlier this week, it would be inappropriate to proceed with a celebratory event between the two countries," said Jenna Ghassabeh, a spokesperson for Canadian Infrastructure Minister Gregor Robertson. The U.S. Dollar Index (DXY) has shown a slight increase, while the AUD/USD maintains a bullish near-term bias.
As the U.S. braces for pivotal midterm elections this November, the trade war with Canada has become a significant issue. "Carney and Canada have become symbolic of resistance to him," Canadian historian Robert Bothwell said. The trade war has not only affected businesses but also the political landscape, with both sides facing challenges in finding a resolution.
What's confirmed
- The current trade war began after Trump returned to office and imposed a series of tariffs on Canadian goods despite having negotiated and repeatedly praised the North American trade agreement during his first term.
- If Canada's defiant approach succeeds, he said, it "could be used as a template" for resisting the Trump administration's trade policies.
- Canada's levies will apply to nearly C$28bn ($20bn; £15bn) of American products, from steel to furniture to cotton T-shirts, and will be as high as 50%.
What's still developing
- One sector that saw a modest bump was manufacturing - a gain the Canadian government attributes to consumers and businesses buying more made-in-Canada products.
- Canada's retaliatory tariffs on a range of US goods came into effect on Tuesday, with no sign of a trade deal on the horizon.
- Fresh fish and lobster were also on the list, but Canada later omitted them after pushback from its seafood industry - a sign of the tricky balance it has to strike as it retaliates against its largest trading partner.
- President Donald Trump threatened on Monday to halt all US business with Canada-based airplane maker Bombardier unless it moved its manufacturing south.
- The company is one of the largest in the country, contributing over C$7bn to Canada's annual GDP in 2024, according to a report commissioned by Bombarier by public accounting firm PwC.
- What tariffs will really cost Canadians and Americans Trump took aim at Canada in a series of other Truth Social posts over the weekend, including one that called Canada's exchange rate with the US "unacceptable".
- Next time make that bullet stick to Trumps head the world will be a better place without him Most Americans don’t care anything of Canada.
- Cant say the same with Carney and Canada Anonymous is a village idiot…with too much time in his parents bsmt.