How did the U.S. and Canada suddenly plunge into a trade war—and what historical grievances and tensions lie behind it?

Bilateral trade between the U.S. and Canada—including services—approaches $900 billion, making it one of the world’s largest bilateral trade relationships. Canada is the United States’ second-largest trading partner, while the U.S. is Canada’s largest export market. For Canada, U.S. tariffs would severely impact industries such as plastics and electrical machinery. Yet Canada’s confidence stems from the high degree of balance in bilateral trade: Canada’s imports from the U.S. amount to roughly 84.7% of U.S. imports from Canada—providing ample room for symmetrical countermeasures. For the U.S., the new tariffs will raise costs for American households and businesses, exacerbating inflation. Auto workers in states like Michigan, Ohio, Kentucky, and Alabama stand to suffer far more from an escalating tariff war than their Canadian counterparts. Political博弈: Whose domestic political base is stronger? In Canada, taking a firm stance against the U.S. enjoys overwhelming political consensus. For Prime Minister Carney, signing an agreement unacceptable to the Canadian public carries far greater political risk than the economic risks posed by tariffs. In the U.S., the new tariffs have drawn broad opposition from both political and business circles—dubbed “the stupidest trade war ever” by The Wall Street Journal. Even Mike Pence, Trump’s former deputy, publicly stated: “What we need least right now is a trade war with Canada.” The Economist observes that, with midterm elections approaching, the tariff shock will translate into a domestic political shockwave across the U.S. Influence博弈: Who controls the negotiations? The U.S. negotiating team itself lacks internal unity. Initially led by Trade Representative Greer, negotiations had nearly reached agreement—only for Commerce Secretary Lutnick to intervene late in the process, overturning prior progress. Canadian officials received conflicting, even contradictory, messages from these two U.S. representatives. This “left-hand vs. right-hand” negotiation style completely eroded Canada’s trust. VII. Will history repeat itself? A “terrifying cycle” from 1930 to 2026 Everyone, please close your eyes and consider this: In 1930, the U.S. enacted the Smoot-Hawley Tariff Act, triggering a global trade war that deepened the Great Depression. In 2026, the U.S. invoked the same law’s Section 338 to impose 50% tariffs on Canadian goods. History does not repeat itself simply—but this time, not even the script has changed! The Wall Street Journal called this “the stupidest trade war the U.S. has ever launched,” arguing the tariff battle has “forged a united Canada and a divided America.” If both sides continue escalating, North America’s regional integration model—built over the past 30+ years—faces the risk of shifting from deep integration toward gradual decoupling. VIII. What lies ahead? Four possible scenarios First: Short-term compromise, long-term confrontation Both sides may prove unable to bear the economic pain and return to the negotiating table to sign a “face-saving agreement.” But trust has already been shattered—and the perception that “America has changed” will not fade. Future friction will only increase, not decrease. Second: Full-scale escalation, mutual harm If Trump indeed imposes 50% tariffs on Canadian automobiles and steel in January 2027, and Canada retaliates by cutting off energy supplies to the U.S., North America’s supply chains would collapse—and both economies would suffer severe damage. Automakers like General Motors and Ford could be forced to withdraw from Canada—the worst-case scenario, yet not impossible. Third: Canada’s “de-Americanization” Canada accelerates trade diversification, reducing dependence on the U.S. In 2025, Canadian exports to non-U.S. partners already rose by 17.2%. If this trend accelerates, the U.S.-Canada relationship could downgrade from a “special relationship” to that of “ordinary neighboring countries.”

Breaking news! U.S.-Canada tariff negotiations have collapsed—so who exactly walked away from the table? An independent, self-reliant, and rapidly developing Canada is imminent! Prospective students and immigrants planning to apply for Canadian study or immigration—this is for you!

I. From ‘Deal Reached’ to ‘Breakdown’—Within Just Three Days On the evening of August 21, Canadian Prime Minister Carney announced the suspension of trade talks with the U.S. and ordered Canadian negotiators to return to Ottawa. On August 22, Carney further announced that Canada would impose dollar-for-dollar equivalent countermeasures on U.S. goods starting September 8. Just three days earlier, Trump had loudly proclaimed that the U.S. and Canada had “already reached an agreement”—only awaiting final documentation. Three days later, the 50% tariffs officially took effect, and the negotiation table was overturned. So—who reneged? The U.S. side tells the opposite story. U.S. Trade Representative Greer claimed Canada refused to finalize the agreement according to previously agreed terms, instead introducing new demands at the last minute and reversing prior commitments. Both sides hold contradictory positions; the final draft text remains unpublished, leaving outsiders unable to determine who is telling the truth. Yet Carney made a blunt statement at his press conference: “They demanded too much—and offered too little.” II. How far had the agreement progressed? The previously disclosed framework was, in fact, highly specific: U.S. commitments included: • Revoking the newly imposed 50% tariffs • Reducing the maximum auto tariff from 25% to 15% • Lowering steel and aluminum tariffs from 50% to 25% (though steel imports might face quotas) Canadian concessions included: • Removing existing retaliatory tariffs • Encouraging provinces to resume sales of U.S. alcoholic beverages • Opening up additional dairy import quotas to the U.S. The agreement might also extend to energy, critical minerals, defense, and digital trade. Where did things go wrong? The U.S. was willing to “reduce” certain tariffs—but refused full elimination. Meanwhile, Canada’s required concessions would directly affect its auto industry, dairy farmers, and provincial alcohol distribution policies. Ultimately, the two sides failed to reconcile these calculations. III. U.S. tariffs are now in effect; Canada chooses September 8 for retaliation The new U.S. tariffs took effect at midnight on August 22, covering approximately US$20 billion (CA$28 billion) worth of Canadian goods. Crucially, even goods compliant with the USMCA are not exempt. Coverage is extremely broad: • Dairy products and alcoholic beverages • Electronic and telecommunications equipment, furniture, construction materials, cement • Plastic packaging, apparel and footwear, sports equipment • Machinery and certain agricultural products Canada’s new round of countermeasures preliminarily targets: steel, dairy products, household appliances, agricultural machinery, pulp and paper, and electronics. The full list and corresponding tariff rates will be published in the coming days. Note: “Dollar-for-dollar” means the total value of Canadian countermeasures matches the U.S. measures—not that all goods face a uniform 50% tariff. IV. Why September 8? Carney’s ‘timing strategy’ Rather than retaliate immediately, Canada set the effective date for September 8—leaving roughly 17 days of buffer time. This is notably longer than previous rounds (e.g., the 2025 comprehensive retaliation took effect the same day as the U.S. measures; the steel-and-aluminum retaliation came just one day later). Carney is playing a strategic game of timing: ✅ These 17 days allow customs authorities and businesses time to prepare ✅ They preserve a final window for negotiations ✅ They give affected U.S. companies and state governments time to pressure the White House ✅ And if the U.S. ignores the deadline entirely, Canada’s September 8 enforcement will uphold the credibility of its red line Carney aims to reclaim “control over timing” from Trump. Three days ago, they declared a deal was done—three days later, they’re blaming each other. Canada’s challenge has long ceased to be merely “whether to concede”—but rather: Even if it concedes, can it secure an agreement that won’t be rewritten again?

WSJ: US to Remove 50% Tariffs on Select Canadian Agricultural Goods

18 hours ago

The Wall Street Journal reports the US plans to remove 50% tariffs on select Canadian agricultural and forestry products to aid Republican midterm candidates. The White House has not confirmed the report, stating any announcements would come directly from the administration.

reuters

2026-10-23

WSJ: US to Remove 50% Tariffs on Select Canadian Agricultural Goods

WSJ: US to Remove 50% Tariffs on Select Canadian Agricultural Goods

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