The United States and Canada are sliding into a full blown trade war after talks aimed at averting 50% tariffs on Canadian goods collapsed Friday night.
Washington, D.C., says this conflict will be devastating for Canada as those 50% tariffs are now in effect on about $20 billion of Canadian products.
But Prime Minister Mark Carney said Canada will retaliate tariff for tariff and dollar for dollar, and he has the support of almost all the provincial premiers as well as most Canadians.
Both sides were optimistic that they were moving closer to an agreement — even President Donald Trump was heralding what he called a fair deal. But Carney said at the last minute, before the midnight deadline for 50% tariffs from Washington to kicked in, American negotiators proposed new terms.
The new terms "were uneconomic, unfair and undermined the net benefits for Canada and called into question the reliability of any deal," Carney said. "In short, they asked too much, and they offered too little."
Carney also said what they offered showed they had no interest in what he called a true economic partnership.
U.S. trade negotiator Jamieson Greer said it was Canada that made new demands and refused to finalize a proposed deal that would have cut sectoral tariffs.
"Really to cut the tariffs on them on steel, on tariff autos, even lumber, things that are sensitive for them," Greer said. "And they’ve always had the best deal, and they still would have an even better deal. But they didn’t want that."
U.S. commerce secretary Howard Lutnick joined the negotiations Friday evening, hours before the deadline, and that’s when talks began to turn sour. Carney said the new demands made by the U.S. on the level of tariffs on automobiles were unacceptable, as were demands that struck at the heart of Canadian sovereignty.
"The U.S. introduced at the last hours efforts to restrict our ability to have other trade deals," Carney said. "We’re the partner of choice in many respects for countries around the world, and the Americans wanted to restrict that. They had language that they wanted to restrict that. Unacceptable."
Carney said another proposal was aimed at restricting Canada’s protections of its language and culture; in effect, its sovereignty.
Carney said contrary to what Greer had claimed, his trade negotiators did not make any new demands.
He said Canada will retaliate dollar for dollar, beginning Sept. 8.
The prime minister is getting widespread support for that decision.
Ontario Premier Doug Ford had been uncharacteristically silent in the days leading up to the deadline. But after the talks broke down and Carney said Ottawa would retaliate, Ford spoke out.
"I’m glad he didn’t sign that deal because it was a bad deal," Ford said. "It was a bad deal for Ontario. It was a bad deal for the auto sector, the steel sector, and manufacturing sector. And we never started this fight, but I can assure you we’re going to win this fight. We’re going to use every single tool we have here in Ontario."
Provincial support from Canada’s premiers and territorial leaders runs across the country — with the exception of oil-rich Alberta. Premier Danielle Smith said tariffs aren’t the way.
Industry representatives are on board with Carney’s decision.
"The important thing here is that the deal that was on the table was not a good deal," said Flavio Volpe, head of the auto parts manufacturers association. "And the prime minister has been repeatedly saying during the past year: We won’t do a deal at any cost, and that we’ll walk away from a bad deal. The first thing I want to say is that I’m glad he kept that promise."
Opposition parties in Canada also support the move to walk away from what they call a bad deal.
"I agree with the decision to walk away, in large part because if you’re negotiating and you’re developing a bargain between two countries, there has to be a benefit for both sides," said Erin O'Toole, the former leader of the federal Conservative party now member of the prime minister's advisory council. "The U.S. wants dominance and to just take what they want."
It’s not just politicians that want to fight back. Political analyst Lori Turnbull said there’s public support for Carney as well.
"Every voice I can see is saying we need to be solid together," Turnbull said. "We need to support the reaction that the prime minister is taking. The counter tariffs that he’s applying are meant to protect us, and that's part of our strategy."
Counter tariffs won’t kick in for about two weeks. Carney has left a crack in the door — a slight opening possibly for talks to resume.
Meanwhile, over the next few days he will outline how his government will support Canadians and businesses as the impact of the trade war begins to bite.
