Another trade war is blowing in, this time with people who have a lot of practice waiting out the storm. Canada officially instituted its $20 billion retaliatory tariffs yesterday on steel, cosmetics, hockey sticks, appliances, and other US products, in response to the US’ tariffs on the country. After the tariffs went into effect, the Trump administration slapped even more tariffs on Canada and also moved to ban imports of some products like rye whiskies and motorcycles. President Trump also called for a ban on sales of planes from Canadian aerospace company Bombardier. He didn’t provide details on how he would enforce this ban, but Bombardier was quick to point out the company’s vast US footprint: - Its supply chain sources parts, like wings and engines, from roughly 2,800 US companies in 47 states.
- Kansas Sen. Jerry Moran objected to the president’s proposal, noting that Bombardier supports a 1,000+ workforce in his home state.
How did we get here?On Aug. 18, things couldn’t have looked better. Trump announced a preliminary deal between the countries, but things quickly fell apart with the intensity of a day-four family vacation crashout. A flurry of claims from each side about non-negotiables and bad faith proposals followed: - Canadian officials said the US wanted changes to how French-language content appears on streaming platforms, which the US denied.
- US Commerce Secretary Howard Lutnick claimed the deal stalled because of an 11th-hour addition from Canada around tariff relief for trucks. An initial deal included the possibility of the current 25% levies dropping to at least 15%.
Yesterday, Canadian Prime Minister Mark Carney said the retaliatory tariffs were meant to protect Canadian workers. He also accused Trump of wanting Canada to be dependent on the US rather than seeking a “true economic partnership.” What’s next…The countries could ratchet the tit-for-tat levies even further, just ahead of an intense midterm season in the US. Ontario Premier Doug Ford even teased restricting electricity exports to border states like New York and Michigan. And as Canada’s relationship with the US sours, it’s strengthening ties to Europe: Canada and the EU are reportedly planning to form an economic and defense partnership.—MM | 
