Canada to Announce Retaliatory Tariffs as Trump Escalates Trade War

Canada is set to announce retaliatory tariffs against the United States on Tuesday as trade tensions between the two countries escalate, with President Donald Trump warning Canadian leaders to “fall in line” or face consequences “far WORSE” than the tariffs already in place.

Trump has also threatened to impose new 50% tariffs on Canadian vehicles, auto parts and steel, while Canadian Prime Minister Mark Carney accused Washington of seeking to subordinate Canada.

Finance Minister François-Philippe Champagne and three other cabinet ministers are expected to announce details of support measures for workers affected by the tariffs on Tuesday morning.

Carney said Monday that Canada may need to move away from matching US tariffs dollar-for-dollar and instead adopt more targeted retaliatory measures to protect Canadian workers and businesses.

“An attitude at the negotiation table that Canada is a subsidiary of the United States” is “not something we're going to accept,” Carney said.

Speaking in French, Carney was even more direct, saying Canada had learned during negotiations that the United States wanted to “destroy our major industries, including autos, steel and aluminum.”

“That was one of the main reasons we said no. It was a bad deal,” he said.

The dispute has sharply strained US-Canada relations since Carney ended trade negotiations with the Trump administration late Friday. Trump responded by threatening 50% tariffs on about $20 billion worth of Canadian goods.

Canada and the United States have one of the world's largest trading relationships, with deeply integrated supply chains spanning automobiles, energy, agriculture and manufacturing. A prolonged trade dispute could therefore impose significant costs on businesses and workers in both countries.

Carney questioned Washington's reliability, saying Canada was finding dependable partners “everywhere in the world, except in the United States. Except in the United States. And Russia.”

Trump escalates threats

Trump on Monday announced further tariff measures targeting Canada's auto industry, saying the new duties would take effect next year.

He also accused Canada of “ripping off” the United States and criticized what he described as Canada's excessively high tariffs on American farmers.

Carney said Washington's proposed measures against the auto sector could gradually dismantle Canada's vehicle manufacturing industry.

“This is the most successful automotive partnership in history,” Carney said, referring to the closely integrated Canadian and US auto industries.

Ontario Premier Doug Ford also criticized Trump, saying the US president had underestimated Canadians' willingness to withstand economic pressure rather than give in to Washington.

“We're all in,” Ford said. “Up here, we're at a fever pitch; everyone’s in for an economic war.”

Trump responded by personally attacking Ford, while Ford dismissed the remarks and said he was prepared to face further pressure.

Although Ford is a Progressive Conservative and Carney is a Liberal, both have emphasized political unity in Canada over the trade dispute.

Canada weighs tougher retaliation

Ford said “everything is on the table” if the dispute escalates, including potentially restricting electricity and critical minerals supplied by Ontario to the United States.

Critical minerals have become increasingly important to US national security and manufacturing, particularly for military equipment, electronics and other strategic industries.

Ford said Canada should consider stronger retaliation if Trump continues targeting Canadian industries, including oil and potash. Ontario could potentially raise electricity prices or halt power exports to the United States, he said.

Ontario previously used electricity as leverage during an earlier stage of the dispute, imposing a 25% surcharge on electricity exports to Michigan, Minnesota and New York. Trump responded by threatening to double tariffs on Canadian steel and aluminum before both sides stepped back.

Auto industry at center of dispute

Ford accused Trump of seeking not only better trade terms but also of weakening Canadian industries and shifting production to the United States.

“He wants to bleed out every single sector and bring them down to the U.S.,” Ford said.

The auto industry is particularly important to Ontario, Canada's main vehicle manufacturing hub. Plants and suppliers in the province are closely linked to factories in Michigan and other US states, with auto parts often crossing the border several times during production.

Automakers including Ford, General Motors and Stellantis operate major assembly plants in Ontario, while the broader supply chain supports tens of thousands of jobs. Trump's proposed 50% tariffs on Canadian vehicles and parts therefore place the sector at the center of the escalating dispute.

US Trade Representative Jamieson Greer said Monday that Canada's auto industry exists in large part because of the 1960s Auto Pact, under which Canada used access to its market to encourage vehicle production.

Canada rejects US demands

Ford also said he opposed a preliminary agreement that Carney had been considering before Canada ended negotiations. He said he was unwilling to restore American liquor products to Ontario store shelves as part of a deal.

Ford said Washington had also sought language that would have limited Canada's ability to negotiate trade agreements with other countries without US approval. Carney rejected the demand as unacceptable and a matter of Canadian sovereignty.

Carney said the dispute had highlighted deeper differences over language and culture, with protections for French and Canadian culture that Washington considers trade irritants regarded as fundamental rights in Canada.

The escalating dispute now threatens to further disrupt one of the world's most deeply integrated bilateral trading relationships.