Carney says US trade war 'will come at a cost' as Canada strikes back on tariffs
Prime Minister Mark Carney said that Canada's pivot away from the US as its largest trading partner "will come at a cost", as a wave of Canadian retaliatory tariffs on American goods come into force.
In a video address, Carney added that the counter-tariffs against the US "are necessary to protect our workers".
Canada's levies will apply to nearly C$28bn ($20bn; £15bn) of American products, from steel to furniture to cotton T-shirts, and will be as high as 50%.
Both US and Canadian officials have said they would like to strike a deal, but no new talks have been scheduled since negotiations collapsed in late August.
In Tuesday's morning's 15-minute video address, Carney said his country's main focus was to diversify its trade relationships and build its economy.
He added that his government would also support workers affected by the ongoing trade war with the US "for as long as it takes".
"We have everything we need to pivot and prosper," the prime minister said. "That pivot will come at a cost.
"There's always a cost to action, but it doesn't come close to the cost of standing still."
Last week, Carney told reporters that Canada was still in search of a deal with the US that is "durable" and in the best interests of both countries.
US trade representative Jamieson Greer said that Washington would consider imposing retaliatory tariffs on Canadian goods as early as Tuesday.
"We'll see this afternoon," said in French, speaking to CBC News.
President Donald Trump threatened on Monday to halt all US business with Canada-based airplane maker Bombardier unless it moved its manufacturing south.
The aerospace giant is one of the largest in the country, contributing over C$7bn to Canada's annual GDP in 2024, according to a report by accounting firm PwC.
Trump argues that these import taxes encourage consumers to buy American-made goods and boost investment in the US from foreign companies.
But economists warn that prices rise for consumers on everyday goods that are targeted by tariffs.
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Trump took aim at Canada in a series of other Truth Social posts over the weekend, including one that called Canada's exchange rate with the US "unacceptable".
Another post showed a map of North America - including Canada and Mexico - and Greenland all overlaid with the US flag.
Canada and the US have the world's largest bilateral trading relationship valued at nearly $900bn last year.
With new US tariffs and Canadian counter-tariffs now in effect, businesses on both side are scrambling to deal with what comes next.
The US currently has in place a 25% tax on Canadian cars and trucks, as well as taxes on Canadian steel, aluminium and lumber.
Golf clubs, cheese, toilet paper
In late August, President Donald Trump imposed new 50% tariffs on other goods like dairy, alcohol, hockey sticks and perfume.
Canada's counter-tariffs, which were described by Carney as "dollar-for-dollar" and range from 15% to 50%, will from Tuesday be applied to hundreds of items coming in from the US.
Products like American milk, golf clubs, steel, aluminium and certain clothing like jackets and T-shirts will face 50% tariffs.
Cheese, toilet paper and certain household appliances like air conditioners will face 25% tariffs, while fork-lift trucks and industrial moulds will be hit with 15% tariffs.
These levies are in addition to existing retaliatory taxes Canada placed on finished American cars and trucks that are not covered by a free trade agreement between Canada, the US and Mexico, known as the USMCA in the US and CUSMA in Canada.
Opinion polls suggest the majority of Canadians support their country imposing retaliatory tariffs on the US.
The Canadian Chamber of Commerce has urged the Carney government to take a surgical approach to retaliation.
"Businesses understand retaliation but don't want to see endless escalation," the Chamber's CEO and President Candace Laing told the BBC on Friday, though she added that businesses "are preparing for this trade dispute to last".
Pushback from the fisheries industry was enough for Canada to alter its counter-tariffs by removing dozens of seafood items to avoid unintended consequences to its own economy.
The lobster industry in both Canada and the US are heavily dependent on the other, with American-caught lobster often sent north to be processed before it is shipped back to the US and sold.
Ahead of the latest tariffs, Canada's economy had shown signs of resiliency. Its GDP grew 3.3% in the second quarter and it had gained 181,000 jobs from April to July.
But around 41,000 jobs were lost in August, a period that coincided with the new US tariffs on Canada and the collapse in trade talks.
One sector that saw a modest bump was manufacturing - a gain the Canadian government attributes to consumers and businesses buying more made-in-Canada products.
Data shows that Canada is also diversifying its trade.
The share of US-bound Canadian exports dropped to 66% from an average of 75% before the trade war, according to July trade figures.
