U.S.-Canada Trade War May Last Through End of Trump's Term as Carney Prepares Long-Term Aid Plan
Nashnova编辑部
Canada's government has internally concluded that resuming trade talks with the U.S. is unlikely before the midterms — and the conflict may last through the remainder of Trump's term. Carney is now shifting to a long-war footing, announcing a domestic business aid package designed to run for the duration.
Why did talks collapse?
Negotiations broke down last Friday evening. Trump immediately slapped 50% new tariffs on hundreds of Canadian goods — furniture, plastics, plywood, electrical equipment.
The tariffs bypass USMCA exemptions entirely, invoking a never-before-used provision of the 1930 Tariff Act.
This means → Washington isn't pressuring Ottawa within the existing trade framework. It jumped outside the framework altogether, using a nearly century-old law to start from scratch — the very foundation for negotiation has been pulled away.
What cards has each side played?
Carney announced Canada will impose retaliatory tariffs starting September 8 on U.S. steel, dairy, appliances, and electronics — C$20 billion worth of goods.
U.S. Trade Representative Jamieson Greer responded: "We have no plans for a new round of talks with Canada." He added that the U.S. is advancing countermeasures against Canadian retaliation.
A U.S. official warned that if Canada proceeds with counter-tariffs, Trump has the authority to escalate again. In plain terms = both sides are raising the stakes, and neither is blinking first.
How big is the economic hit?
The Canadian dollar fell sharply against the U.S. dollar when Asian markets opened Monday.
University of Calgary economist Trevor Tombe estimates that if the new tariffs persist, roughly 90,000 Canadian jobs are at risk — about 0.4% of the total workforce.
TD Bank deputy chief economist Randall Bartlett warned that GDP growth will be shaved by roughly 0.2 percentage points this year and 0.3 next year.
This means → the tariff shock isn't just a trade-ledger problem — it feeds directly into jobs and growth.
What is Carney's domestic hand?
A post-breakdown poll showed three-quarters of Canadians support Carney's decision to walk away from the table, even though many respondents simultaneously expressed concern about the economic fallout.
Carney's Saturday speech drew broad cross-party support, strengthening his political position for a prolonged conflict.
This reflects a key reality: high approval gives Carney a political buffer to fight a long war — but whether that support holds once the economic pain becomes tangible is a separate question.
Can the aid package cover the damage?
Canadian Chamber of Commerce policy director Matthew Holmes noted that the 50% tariff is extraordinarily broad, hitting small and mid-sized businesses across the country in vastly different supply chains.
In plain terms = the affected firms are too dispersed and span too many industries for the federal government to design a single, one-size-fits-all aid program.
Details of the aid package have not yet been released. Carney said "all the details" would come "in a few days."
What comes next?
The Bank of Canada faces a two-way squeeze: U.S. tariffs suppress exports and drag on growth, while Canada's own retaliatory tariffs push up domestic inflation — cutting rates to save growth or raising them to tame inflation are both bad options.
Whether a last-minute negotiating window opens before the September 8 retaliatory tariffs take effect is the pivotal question for what happens next.
But Ottawa's internal assessment is already clear: the odds of resuming talks before the midterms are very low. Canada is preparing to fight until Trump leaves office.
Content is for reference only, not financial advice.