Canada Set to Hit Back at Trump Tariffs, Risking Wider Trade War

(Bloomberg) -- Canada is poised to impose tariffs of 15% to 50% on hundreds of products from the US on Tuesday, as Prime Minister Mark Carney bets that standing up to President Donald Trump will eventually help Ottawa's negotiating position with its biggest trading partner.

Barring a last-minute reprieve, Carney's government will increase the import tax on many US steel items to 50% from 25% and apply tariffs to a range of consumer items — motorcycles, cosmetics, cheese and more.

The measure will hit US exporters particularly hard in states such as Michigan and Ohio that do a lot business with Canada and host heated races in November's midterm elections.

It's a calculated risk for Carney, who a year ago removed many of the counter-tariffs his predecessor, Justin Trudeau, had implemented. Trump administration officials have repeatedly said they won't tolerate retaliation and noted that only two countries, Canada and China, have used counter-tariffs.

US officials have declined to specify how or when Trump may respond with fresh measures of his own.

"Canada's retaliatory tariffs are meant to make the cost of this trade war real enough for American businesses and consumers that Washington sees a clear incentive to return to the table," said Brian Clow, who was a senior Canadian adviser on trade and US relations under Trudeau. "Canada isn't imposing these tariffs because it wants a trade war. It's imposing the tariffs because it wants the trade war to end."

US and Canadian negotiators sought for weeks to reach a deal to lower trade tensions and had appeared to agree on the broad terms. Trump even announced on Aug. 18 that they had a preliminary deal and gave three days to work out the details. Then it fell apart.

The collapse of those talks ushered in two weeks of venting and criticisms from both governments. Each side blamed the other for torpedoing an agreement in the final hours. They were still sniping over the weekend: Treasury Secretary Scott Bessent on Fox News compared Canada to a "little yippy dog" barking at a much larger one.

Trump lobbed another veiled threat on Sunday, saying "Canada's (currency) Dollar imbalance with the U.S. is unacceptable," he wrote in a Truth Social post. "It has been that way for years — but no longer!" The White House declined to clarify what he meant.