Trump escalates trade war with Canada following Palestine stance

REUTERS
Published :
Aug 01, 2025 09:13
Updated :
Aug 01, 2025 09:13



U.S. President Donald Trump and Canadian Prime Minister Mark Carney attend a meeting with G7 leaders and guests, at the G7 summit in Kananaskis, Alberta, Canada on June 16, 2025 — Reuters/File

US President Donald Trump intensified his trade war with Canada a day ahead of his August 1 deadline for a tariff agreement, saying it would be "very hard" to make a deal with Canada after it gave its support to Palestinian statehood.

Trump is set to impose a 35 per cent tariff on all Canadian goods not covered by the US-Mexico-Canada trade agreement if the two countries do not reach an agreement by the deadline.

"Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them," Trump said on Truth Social.

Canadian Prime Minister Mark Carney previously said tariff negotiations with Washington had been constructive, but the talks may not conclude by the deadline. Talks between the two countries were at an intense phase, he added, but a deal that would remove all US tariffs was unlikely.

Canada is the second-largest US trading partner after Mexico, and the largest buyer of US exports. It bought $349.4 billion of US goods last year and exported $412.7 billion to the US, according to US Census Bureau data.

Canada is also the top supplier of steel and aluminum to the United States, and faces tariffs on both metals as well as on vehicle exports.

Last month, Carney's government scrapped a planned digital services tax targeting US technology firms after Trump abruptly called off trade talks saying the tax was a "blatant attack."

Carney followed France and Britain as he said on Wednesday that his country was planning to recognise the State of Palestine at a meeting of the United Nations in September.

In announcing the decision, Carney spoke of the reality on the ground, including starvation in Gaza.

"Canada condemns the fact that the Israeli government has allowed a catastrophe to unfold in Gaza," he said.

Israel and the United States, Israel's closest ally, both rejected Carney's comments.

Carney's office did not immediately respond to a request for comment on Trump's post.​

Trump threatens Canada with 100pc tariff over pending trade deal with China

REUTERS
Published :
Jan 25, 2026 00:14
Updated :
Jan 25, 2026 00:14



The Canadian and U.S. flags flutter at the Lansdowne Port of Entry next to the Thousand Islands Bridge in Lansdowne, Ontario, Canada February 12, 2025. REUTERS/Patrick Doyle/File Photo

U.S. President Donald Trump said on Saturday he would impose a 100% tariff on Canada if it follows through on a trade deal with China and warned Canadian Prime Minister Mark Carney that a deal would endanger his country.

"China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life," Trump wrote on Truth Social.

"If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A."

Carney's office did not immediately respond to a request for comment.

The Canadian prime minister this month traveled to China to reset the countries' strained relationship and reached a trade deal with Canada's second-biggest trading partner after the United States. Immediately after Carney's China trip, Trump sounded supportive. "It's a good thing for him to sign a trade deal," Trump told reporters at the White House on January 16. "If you can get a deal with China, you should do that."

But U.S.-Canada tensions have grown in recent days following Carney's criticism of Trump's pursuit of Greenland.​

US imposes new 50pc tariffs on $20 billion worth of Canadian products

A drone view shows shipping containers at the Port of Montreal in Montreal, Quebec, Canada on April 14, 2025. — Reuters/File

US President Donald Trump unveiled 50 per cent tariffs on a wide range of imports from Canada on Monday in response to what the US administration called its discriminatory treatment of American-made cars, alcohol and dairy goods, threatening a new front in a global trade war.

In slapping import taxes on goods ranging from ‌wine to cement and ice hockey gear, Trump invoked Section 338 of the Tariff Act of 1930, which permits a president to impose punitive tariffs of up to 50 per cent against trading partners deemed to have discriminated against US goods. That marked the law's first known usage in nearly a century of existence.

The new tariffs, set to take effect in 30 days, would also apply to dairy products, swimming pools, furniture, fishing rods, seeds, clothing and wigs, among other items.

The US Trade Representative's office said that the tariffs would apply to nearly $20 billion of imports from Canada. That's about 5.2 per cent of the $382 billion worth of goods that the US imported from Canada in 2025, according to US Census Bureau data.

"While the Administration continues to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to ⁠rebalance trade and protect U.S. industry in national-security sensitive sectors," US Trade Representative Jamieson Greer said in a statement.

Canadian Prime Minister Mark Carney said in a statement that his government has made comprehensive proposals to resolve trade disputes with Washington, asserting that Trump's past tariffs violated the North American trade pact.

"This trade dispute has raised costs for families, particularly in the U.S.," he said. "Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens."

The Trump administration has long complained that Canada and China implemented retaliatory measures in response to the barrage of tariffs Trump has tried to impose since returning to the White House last year.

Greer has pointedly left Canada out of negotiations under way with Mexico on changes the US wants in the US-Mexico-Canada Agreement on trade. He holds bilateral talks on USMCA in Mexico City this week.

When Trump and Carney met at the FIFA World Cup Final in New Jersey on Sunday, Trump demanded that Carney take action to contain wildfires that have sent smoke billowing across swaths of the US. The US president last week threatened to add the "incalculable cost" of dealing with the pollution to existing tariffs on Canadian goods.

FIRST USAGE

The Tariff Act of 1930 and its Section 338 are better known for massive US tariff increases and subsequent retaliation that economic historians say worsened the Great Depression of the 1930s.

Section 338 was intended to ensure countries apply tariffs ‌equally and don't ⁠give preferential rates to some countries at the expense of US exports, said John Veroneau, a US trade official in President George W. Bush's administration who has extensively researched the statute.

He said that some presidents, including Franklin D. Roosevelt, considered imposing tariffs under Section 338, but no record could be found of any president taking such action until Trump's proclamations on Monday.

"It is ironic, to say the least, to use this authority to impose tariffs to retaliate against tariffs that were imposed in response to actions taken by the U.S.," said Veroneau, senior counsel with the Covington and Burling law firm.

"These tariffs may be lawful under Section 338, but they at a minimum violate the spirit of Section 338, which was to create a world where countries apply the same tariffs on the ⁠same goods to all countries," he said, adding Trump has moved away from this principle "in a maximalist way."

After World War Two, major countries created the "most-favored-nation" tariff system through the General Agreement on Tariffs and Trade to try to prevent a return to the pre-war "beggar-thy-neighbor" economic policies marked by competitive trade restrictions and currency devaluations.

Trump's new levies are set to take effect on August 19 and apply regardless of whether goods qualify for tariff exemptions under USMCA, although Trump exempted a range of key goods including energy, potash, fish, critical ⁠minerals and products already covered by Section 232 tariffs.

Among grounds for the tariffs, the White House cited Canada's "protectionist" dairy supply management system as well as tariffs and quotas on cars imported to Canada from the U.S. but not from other countries. Carney said that Canada "as is its right, merely matched" US tariffs on the auto sector that were in violation of the USMCA.

Washington also highlighted that most Canadian provinces have halted the sale of US alcohol, which they did in response ⁠to prior US tariffs.

The White House said Canadian imports of US motor vehicles dropped by 22 per cent and of US alcoholic beverages by 81 per cent over the past year.

Diamond Isinger, a former senior adviser to ex-Prime Minister Justin Trudeau on US-Canada relations, said Carney would have limited ability to compel provinces to start selling American alcohol again.

“Unless there are some sort of extraordinary measures invoked here, the premiers of those provinces are the ones who decide whether to restock alcohol,” Isinger said.​