Trump administration warns US-Canada trade war could have ‘devastating’ impact on Canada

The Trump administration on Sunday warned Canada that it would be “foolish” to believe it could win a trade war with the United States, predicting a “devastating” economic impact on its northern neighbour.

The warning came after trade negotiations between Washington and Ottawa collapsed late Friday, triggering new 50% US tariffs on about $20 billion worth of Canadian goods, equivalent to roughly 5.5% of Canada’s exports to the United States.

Canada responded by announcing matching tariffs, including new duties targeting US steel and dairy products that will take effect on September 8.

US Transportation Secretary Sean Duffy said Canada would ultimately suffer more from a trade confrontation with President Donald Trump.

“Canada gets the benefit of trading with the US way more than the US gets the benefit of trading with Canada,” Duffy said on Fox News Sunday. He added that believing Canada could “go to war with Donald Trump and actually win that war with the US” was “foolish.”

Duffy predicted that Canadian Prime Minister Mark Carney would return to negotiations “very, very quickly” because the trade conflict would be devastating for Canada.

Carney, however, struck a defiant tone on Saturday, announcing retaliatory tariffs after rejecting what he called a “bad deal” offered by Washington.

“You’re at war when you get attacked. We got attacked,” Carney said.

He cited last-minute US demands that would have restricted Canada’s ability to negotiate trade agreements with other countries, along with what he described as unacceptable threats to the French language and Quebec culture.

Trump responded on Sunday by again suggesting Canada should become a US state and accusing Ottawa of imposing heavy tariffs on American farmers.

‘Bully in Washington’

The escalating dispute reflects a widening rift between the longtime allies since Trump returned to the White House in January 2025, including his repeated calls for Canada to become the 51st US state.

Carney has said the relationship with Washington has been permanently altered and that Canada needs to reduce its economic dependence on the United States.

Despite concerns over the economic consequences, Carney has gained domestic political support for his tougher stance toward Washington since becoming prime minister.

“We have a bully in Washington,” retired Canadian teacher Stuart Edwards told AFP in Fort Erie, Ontario, near the Peace Bridge, a major trade route between the two countries.

“We’re not going to put up with it, Canada isn’t. We’ll fight back,” he said.

Trade Talks Collapse

During the latest negotiations in Washington, Canada had sought relief from US tariffs on automobiles, steel and aluminium, measures that have weighed on its economy, led to job losses and strained the countries’ traditionally close trade ties.

The White House has accused Canada of discriminatory treatment of US alcohol, automobile and dairy products.

US Trade Representative Jamieson Greer told The New York Times that Washington had offered to lower tariffs on Canadian steel, aluminium and automobiles and remove a recently imposed tariff on Canadian lumber.

Greer said the proposals would have given Canada “the most preferential treatment of any trading partner,” according to the newspaper.

He added that no new negotiations with Canadian officials were currently planned.