US President Donald Trump has escalated the trade fight with Canada, while Prime Minister Mark Carney has suspended talks and ordered matching tariffs against Washington. The US has imposed 50% tariffs on about $28 billion of Canadian goods, and Canada says its dollar-for-dollar response will begin on September 8, raising fresh risks for workers, businesses and consumers on both sides.
Reviving his “51st State” rhetoric, Trump accused Canada of seeking the benefits of being part of the United States without becoming a state. He also criticized Canada's trade policies and accused Ottawa of imposing high tariffs on American agricultural products.
Notably, the "51st state" label is a political insult used to suggest Canada functions as an American territory due to heavy reliance on the US for trade and security. Donald Trump used this rhetoric during 2024 trade negotiations to exert pressure on Canada regarding tariffs.
In a post on Truth Social, Trump wrote, “Canada wants the benefits of being a State, without being one!!! They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!”
The comments came as efforts to reach a new US-Canada trade agreement broke down, adding pressure to an already strained economic relationship.
Carney said Canada had been working toward a possible agreement with Washington, but the latest US demands changed the situation.
“They asked too much, and they offered too little,” he said.
The Canadian prime minister said the US terms were “uneconomic, unfair, and undermined the net benefits to Canada.” He said the demands also raised doubts about whether Canada could depend on a future agreement with Washington.
Carney ordered Canada's negotiating team to return to Ottawa after the talks were suspended. He said the latest US position also showed the limits of Washington's commitment to a genuine economic partnership.
One of the biggest disputes involves Canada's right to negotiate trade agreements with other countries.
Carney said Ottawa would not accept limits on its ability to make independent trade decisions. Canada is working to expand trade with countries outside the United States to reduce its reliance on the American market.
“We're a proud independent country. We've got the right values. We'll make our decisions about who we want to trade with and how and including on how we work with the United States,” he said.
Carney said Canada would continue building trade and economic ties around the world. The Canadian government says it has signed more than 20 trade and security deals over the past year and wants access to more international markets.
The latest escalation follows the US decision to impose 50% tariffs on roughly $28 billion of Canadian goods. The duties affect products including hockey equipment, clothing, cement and other goods.
Canada will now respond with matching tariffs. Carney said the move is designed to protect Canadian workers, farmers, families and businesses from the impact of the US duties.
“Canada will match the U.S.' new tariffs dollar for dollar in order to protect Canadian workers, farmers, families, and businesses. We take this step confident that it is in the best interests of Canada,” he said.
Canada's new counter-tariffs will cover sectors including steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.
The measures are scheduled to take effect on September 8, the Tuesday after Labour Day.
The collapse of the talks adds another strain to the economic relationship between Canada and the United States. Canada relies heavily on the US market, while American businesses and consumers also depend on Canadian energy, goods and materials.
Higher tariffs could increase costs for companies and consumers in both countries. Businesses may also face higher production costs and disruption to supply chains if the dispute continues.
Carney said Canada had sought an agreement that would protect workers and businesses while keeping stable access to the US market. Ottawa was prepared to make concessions in some areas but would not compromise on Canadian sovereignty or its ability to build new trade relationships.
Despite the breakdown, Canada has not closed the door on a future agreement with Washington. Carney said a mutually beneficial trade deal remains possible if the United States offers terms Canada considers fair and reliable.
For now, Ottawa is preparing for a longer trade fight. The Canadian government says it will support affected workers and businesses while continuing efforts to expand trade beyond the United States.
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