Canada pushes trade diversification after slapping tariffs on US goods

Canada has imposed retaliatory tariffs on about USD 20 billion of American goods and hardened its stand against Washington. Prime Minister Mark Carney says the trade war is forcing a costly but necessary turn towards trusted partners.Canada has moved to cut its economic reliance on the United States after retaliatory tariffs took effect on about USD 20 billion worth of American goods, with Prime Minister Mark Carney saying the country must speed up efforts to diversify trade and investment as it braces for President Donald Trump's response.Carney said four decades of deeper economic integration had left Canada too dependent on the US. In a pre-recorded video outlining his government's plan to deal with the trade war, he said, "In too many areas, they wanted dependency, not a true economic partnership."The trade war began after Trump returned to office and imposed a series of tariffs on Canadian goods, despite having negotiated and repeatedly praised the North American trade agreement during his first term. Many of those tariffs violate the pact. The breakdown is notable because the two countries have long shared close economic links, defence and security cooperation, strong cultural ties and, before relations worsened, about 400,000 people crossing the border every day.Carney said the latest US trade actions would cause short-term pain, but added that they were pushing Canada to move faster on investment, infrastructure and trade diversification. He said the shift would be costly, but standing still would cost more. Contrasting Canada's worsening relationship with Washington with its growing ties with what he called more reliable countries, Carney said, "For the past year and a half, we have been steering our economy toward trusted partners." He added, "It was easy business, but it meant we relied too much on one economic partner. That time is over." Defending Canada's retaliation, Carney said Ottawa was matching the latest US measures dollar for dollar, while supporting affected workers and industries and speeding up efforts to expand trade with other countries. "We can't let American goods into Canada tariff-free while they charge our companies to export to them," he said. He said Canada was not seeking to escalate the confrontation, but the tariffs were needed to protect Canadian workers.Carney also defended Canada's decision to walk away from the talks, saying Washington had sought limits on French-language and cultural protections, influence over future trade deals, and terms that would weaken the auto, steel and forestry sectors. US Trade Representative Jamieson Greer has suggested Washington could respond by blocking some Canadian products from the US market. The Canadian tariffs cover hundreds of US products, including steel, aluminium, cheese, appliances, clothing, cosmetics and farm equipment, at rates of 15 per cent, 25 per cent or 50 per cent. They apply to about USD 20 billion in American goods, roughly 6 per cent of the USD 333.6 billion the United States exported to Canada last year.Since Canada-US trade talks collapsed on August 21, Trump and his administration have imposed additional tariffs and issued a series of threats and attacks portraying Canada as weak and dependent. Trump's trade war, along with his repeated comments about making Canada the 51st state, has fuelled anger and rallied support for Carney. Canadians have sharply reduced travel to the United States and boycotted American goods. Praising those actions, Carney said, "every time we choose to buy Canadian and travel in Canada, we are sending a message that nobody is in the stands, 40 million of us are on the ice."Gabriel Brunet, a spokesman for Canada-US Trade Minister Dominic LeBlanc, said officials from both sides remained in touch although formal negotiations had not resumed. "Canadian and American officials have maintained ongoing discussions on a range of issues, although formal trade negotiations are not taking place at this stage," Brunet said. Former US trade official Wendy Cutler said neither side appeared eager to make the first move. "With a growing public approval rating now topping 70 per cent, Prime Minister Carney is not in any hurry to reach out to Washington. But importantly, he has not closed the door to talks," she said. "Clearly, at this point each side does not want to look too anxious to reengage in fear of looking weak."For now, Canada has responded with tariffs, stepped up its push to find other trading partners and kept limited contact with Washington, while no formal move has been made to restart negotiations.With PTI Inputs- EndsPublished By: India Today Web Desk Published On: Sep 8, 2026 23:52 IST