Canada readies retaliatory tariffs as Trump ramps up trade threats

Canada will announce retaliatory tariffs after trade talks with the Trump administration collapsed. The clash has widened into a fight over sovereignty, jobs and the future of key industries.

In Short

• Ottawa may use targeted measures instead of mirroring US duties exactly
• Trump warned Canada of harsher consequences and fresh 50 per cent duties
• Carney said Washington sought terms that would damage autos, steel and aluminium

Canada is set to announce retaliatory tariffs against the United States on Tuesday, according to an official familiar with the plans, in a sharp escalation of a trade fight that has worsened since talks with the Trump administration collapsed. Prime Minister Mark Carney said Ottawa may no longer match US tariffs dollar for dollar and could instead use more targeted measures to protect Canadian workers and businesses.

US President Donald Trump intensified the dispute on Monday, telling Canadian leaders to "fall in line" or face consequences "far WORSE" than the tariffs already imposed. He also threatened new 50 per cent tariffs on Canadian vehicles, auto parts and steel, prompting Carney to accuse Washington of trying to subordinate Canada and dismantle major Canadian industries.

The official who spoke about Canada's tariff plans did so on condition of anonymity because they were not authorised to discuss them publicly. The latest confrontation follows Carney's decision late on Friday to walk away from trade negotiations with the Trump administration, after which Trump threatened 50 per cent tariffs on about USD 20 billion worth of Canadian goods the next day.

Carney said, "An attitude at the negotiation table that Canada is a subsidiary of the United States" is "not something we're going to accept". He was even blunter in French, saying, "We learned during the negotiations that the Americans want to destroy our major industries, including autos, steel and aluminium. That was one of the main reasons we said no. It was a bad deal." He also questioned Washington's reliability, saying Canada was finding reliable partners "everywhere in the world, except in the United States. Except in the United States. And Russia."

Trump returned to the offensive on Monday by warning that further tariffs would hit Canada's auto industry from next year. "Canada has been ripping off the United States of America for years," he wrote on social media, while criticising what he called the country's "ridiculously high tariffs" on American farmers. Carney said the US proposals on the auto sector would gradually dismantle Canadian production, adding, "This is the most successful automotive partnership in history," in reference to the deeply integrated Canada-US industry.

Ontario Premier Doug Ford also struck a defiant note in an interview with The Associated Press, saying Trump had underestimated Canadians' willingness to bear economic pain rather than give in. "We're all in," Ford said. "Up here, we're at a fever pitch; everyone's in for an economic war. They know they're going to have to sacrifice." After Trump called him "the less charismatic, intelligent, and overall unimpressive brother of the late, great, Rob Ford" and again referred to the prime minister as "Governor Carney", Ford replied, "If you think an insult from him hurts me? Well, bring it on, buddy, I'm ready." Although Ford is a Progressive Conservative and Carney is a Liberal, both have underlined a broad political unity in Canada over the dispute.

Ford said "everything is on the table" if the fight worsens, including cutting off electricity and critical minerals from Ontario. He said Canada should also consider stronger retaliation if Trump continues targeting Canadian industries, including oil and potash, while Ontario could raise electricity prices or stop sending power south. "We power 1.5 million homes and businesses," Ford said. "Everything's on the table. I'll do whatever it takes." Critical minerals have become increasingly important for US national security and manufacturing, and the Pentagon has sought more secure supplies for military aircraft, missiles, munitions and electronics as Washington tries to reduce reliance on China. Ford has used electricity as leverage before: in an earlier phase of the dispute, Ontario imposed a 25 per cent surcharge on electricity exported to Michigan, Minnesota and New York before both sides stepped back.

The auto industry has now become a central battleground. Ford accused Trump of trying not just to secure a better trade deal but to hollow out Canadian industries and shift production south. He said Trump wanted to make Canada a vassal state, adding, "He wants to bleed out every single sector and bring them down to the US." The sector is especially important to Ontario, where plants and suppliers are tightly linked with factories in Michigan and other US states, with parts crossing the border multiple times during production. Automakers including Ford, General Motors and Stellantis run major assembly plants in Ontario, and the wider supply chain supports tens of thousands of jobs. US Trade Representative Jamieson Greer said on Monday that "the only reason Canada has auto production in the first place" was the 1960s Auto Pact, under which Canada used access to its market to encourage vehicle production north of the border.

Ford also said he had opposed the preliminary deal Carney had been considering before Canada broke off negotiations, and that he was not prepared to restore American liquor to Ontario shop shelves as part of any agreement. "I wasn't going to put the booze back on the shelves," Ford said. "I was ready to go out there and call a press conference ... and say I'm not buckling over." He said he understood that Washington had sought language late in the talks that would have limited Canada's ability to negotiate trade agreements with other countries without US approval, a demand Carney has called unacceptable and a matter of Canadian sovereignty. Carney also said the dispute had exposed a deeper divide over language and culture, with protections for French and Canadian culture seen by Washington as trade irritants but treated in Canada as fundamental rights.

With Canada preparing fresh tariffs and the US threatening more duties, the dispute has widened beyond trade to questions of industry, sovereignty and political resolve. Summing up the mood in Canada, Ford said of Trump, "Who does he think he is? You gotta be kidding."

With PTI Inputs

- Ends