Canada Prepares Tariff Retaliation, US Economy Threatened with Impact
Relations between Canada and the United States are heating up further following the failure of trade negotiations that triggered a trade war between the two neighbouring countries. On Saturday (22/8/2026), the US imposed tariffs of 50 percent on Canadian commodities worth around 20 billion US dollars.
Canadian Prime Minister Mark Carney said his country would begin retaliating against the policy on 8 September. Canada is targeting various sectors, ranging from steel, dairy products, household appliances, agricultural tools, pulp, paper to electronic goods.
Canada sends around 70 percent of its exports to the US. The country is also a major consumer for 26 US states, including Maine, Michigan and Wisconsin, and ranks among the top three trading partners for 45 of the 50 US states.
Given the high volume of trade and the geographical proximity of the two countries, the latest friction triggered by President Donald Trump’s administration is expected to affect the economies of both nations.
Last weekend, Carney said Canada supplies most of the US’s imported gas and electricity needs as well as around 60 percent of the crude oil used by the US. “I don’t think they want us to stop sending that energy,” Carney said, as quoted by the BBC on Monday (25/8/2026).
Canada has not yet confirmed whether energy will be included in the list of commodities subject to retaliatory measures. A number of political officials said the option remains open. However, not all provincial premiers in Canada support using the energy sector as a lever against the US.
Ontario Premier Doug Ford said he is ready to face the trade war. Ontario is the centre of Canada’s automotive industry. Ford has also been one of the most vocal critics of Trump in Canada.
In 2025, Ford proposed a 25 percent tariff on all electricity exported from Ontario to the US. The move was estimated to affect 1.5 million households and businesses in Michigan, Minnesota and New York.
Canada is also a major producer of various strategic commodities, including potash used in the fertiliser industry.
“I would love to see him (Trump) drive a car with no oil at all. I would really like to see how he grows vegetables and fruit without potash. President Trump underestimates us, and that is his biggest mistake,” Ford said.