Canada says no to US tariff deal. Now comes the cost
The Canadian government has refused a proposed trade deal with the United States, resulting in escalating tensions and new tariffs. On Saturday, the US imposed a 50% tax on hundreds of Canadian products, including furniture, plastics, plywood, and electrical equipment, potentially cutting off the largest global market for certain Canadian businesses. University of Calgary economist Trevor Tombe estimated that 90,000 jobs, or about 0.4% of Canada's labor force, could be lost if the tariffs persist.
Markets reacted negatively, with the Canadian dollar falling sharply against the US dollar on Monday. Many small manufacturers previously shielded from early US tariffs now face uncertain consequences, as the 50% levy disregards trade agreements. Prime Minister Mark Carney pledged financial assistance for affected businesses, but warned that this trade dispute will hit Canada's economy sooner than the US.
Carney announced counter-tariffs on $20 billion worth of US steel, dairy, appliances, electronics, and other products starting September 8. Though he acknowledged the trade war would harm the economy, he emphasized that Canada did not initiate it. Polls show that 74% of Canadians support Carney's decision to walk away from the negotiations, yet 38% of the workforce worries about job impacts, and 89% are concerned about rising living costs.
Former trade minister Mary Ng expressed concern over the US's lack of value for the integrated markets Canada has developed over decades.
The breakdown in talks reflects a permanent shift in American trade posture, with Canada being the top export customer for at least 25 US states and among the top three customers for over 40 states. Canada's economy is expected to face a further decline in growth due to the tariffs, according to economists. The provinces of British Columbia, Ontario, and Quebec are particularly vulnerable to the new tariffs.
Canada's government aims to provide support measures for businesses affected by the US tariffs to endure until the end of Trump's term.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
