Carney Says Canada Is ‘At War’ With US Over Trade as 50% Tariffs Hit

Canadian Prime Minister Mark Carney said Canada is now ‘at war’ with the US over trade after President Donald Trump escalated tariffs and negotiations collapsed late Friday. Carney told reporters the US ‘miscalculated’ by escalating its tariff attack, adding, ‘You’re at war when you’re attacked, and we got attacked.’

What just happened

The US and Canada fell deeper into a trade war Saturday, with Washington imposing 50% tariffs on roughly $20 billion worth of Canadian goods after negotiations broke down in Washington late Friday. The 50% duties went into effect at the stroke of midnight.

Carney said ‘Canada will match those tariffs dollar for dollar,’ with retaliatory duties concentrated in sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, taking effect Sept. 8.

Why talks collapsed

Carney blamed the breakdown on what he called the Trump administration’s ‘uneconomic’ and ‘unfair’ demands, saying the US proposed new terms that undermined the net benefits for Canada and called into question the reliability of any deal.

Carney said the US added last-minute terms that would have reduced tariff relief for Canadian-made vehicles, restricted Canada’s ability to strike trade deals with other countries and weakened protections for language, culture and sovereignty.

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What is getting hit

The US import taxes will apply to hockey sticks, building materials, liquors and certain kinds of clothing. The duties will hit about 5% of what Canada ships to the US every year, ranging from hockey sticks to tongue depressors.

The moves also call into question the future of the North American trade agreement covering the US, Canada and Mexico that is crucial to industry across the continent.

Political backdrop

Ontario Premier Doug Ford, who leads Canada’s most populous province, praised Carney for rejecting the deal, saying it would have hurt Ontario’s auto, steel and manufacturing sectors, and urged Canada to use ‘every tool in our toolbox’ to fight the US tariffs.

The collapse was a reversal from Tuesday, when Trump paused the tariffs for three days, writing on social media that the two sides ‘have a DEAL!’

Options market and stocks to watch

Traders should watch names with heavy US-Canada exposure across autos, steel, materials and rails as the retaliation window opens Sept. 8.

• GM and F — watch for headline risk on cross-border auto supply chains, since Carney flagged reduced tariff relief for Canadian-made vehicles.
• STLD and NUE — watch domestic steel names as Canada targets steel in its retaliation basket.
• CP and CNI — watch the rails, which move a large share of cross-border freight and would feel volume compression if tariffs stick.
• DEO — watch for exposure via liquors, one of the categories now subject to the 50% US duties.

For more market and trade headlines, keep an eye on the tape into Sept. 8.

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