Trump administration warns trade war would be “devastating” for Canada

Abi Sarabia M., Philippine Canadian Inquirer
August 25, 2026

Photo courtesy: The White House

WASHINGTON, United States — The Trump administration warned Canada on Sunday against escalating its trade dispute with the United States, saying Ottawa has more to lose after negotiations between the two countries collapsed last week.

The warning came after Washington imposed new 50% tariffs on about $20 billion worth of Canadian goods. Canada responded by announcing matching tariffs on US products, including steel and dairy, that are set to take effect on September 8.

US Transportation Secretary Sean Duffy said Canada’s reliance on the American market puts it at a disadvantage in a prolonged trade fight.

“We’re great trading partners, right? But Canada gets the benefit of trading with the US way more than the US gets the benefit of trading with Canada,” Duffy said on “Fox News Sunday.”

“To think that they’re going to go to war with Donald Trump and actually win that war with the US, I think it’s foolish on their part,” he added.

Duffy said he expects Canadian Prime Minister Mark Carney to return to the negotiating table “very, very quickly,” warning that a prolonged dispute could be “devastating” for Canada.

Carney, however, defended Ottawa’s decision to retaliate after talks broke down Friday, saying Canada walked away from what he described as a bad deal.

“You’re at war when you get attacked. We got attacked,” Carney told reporters Saturday.

He said Washington introduced last-minute demands that would have limited Canada’s ability to pursue trade agreements with other countries and posed unacceptable threats to protections involving the French language and Quebec culture.

President Donald Trump responded Sunday on Truth Social, accusing Canada of imposing high tariffs on American farmers and saying the country “wants the benefits of being a State, without being one.”

The latest exchange deepens tensions between the longtime allies, whose economic relationship has become increasingly strained since Trump returned to the White House in January 2025.

Canada sends roughly 70% of its exports to the United States, making the US market critical to its economy. Carney has since called for Canada to reduce that dependence and expand trade with other countries.

During the negotiations, Ottawa had sought relief from US tariffs on Canadian autos, steel, aluminum and lumber, which have weighed on affected industries.

Washington, meanwhile, has accused Canada of maintaining trade barriers that disadvantage American products, particularly in the dairy, automobile and alcohol sectors.

US Trade Representative Jamieson Greer told The New York Times that Washington had offered to lower tariffs on Canadian steel, aluminum and autos and eliminate recently imposed duties on lumber before talks collapsed.

Greer said the proposal would have given Canada preferential treatment compared with other US trading partners. He also said no new negotiations are currently scheduled.

With Canada’s retaliatory tariffs due to take effect September 8, both sides now face the prospect of a wider trade dispute unless negotiations resume.