Canada is preparing for retaliatory tariffs to take effect on Tuesday after negotiations with the US stalled in August. Trade watchers warn of an escalating trade war between the two countries, with some experts suggesting that Canada should prepare for economic pain. The US has already imposed a 50% tariff on $28 billion worth of Canadian goods under Section 338 of the Tariff Act of 1930, and Canada is set to impose retaliatory tariffs ranging from 15 to 50% on $27.6 billion worth of US goods. Experts are warning that the situation may lead to an ongoing cycle of tit-for-tat escalation between the two countries.
Written by the local model on 2026-09-07,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
Canada's trade tensions with the US escalate as Ottawa prepares to impose $28 billion worth of tariffs on American goods starting Tuesday, in response to a 50% tariff imposed by President Donald Trump last month. Prime Minister Mark Carney's government has said it will not back down, despite warnings from experts that the fallout could be "ugly" due to the president's volatility.
The Canadian government has been at odds with the US since August 21, when trade talks broke down and Trump imposed the tariffs on nearly $28 billion worth of Canadian goods. In response, Canada is imposing tariffs ranging from 15% to 50% on American imports, including steel, aluminum, textiles, stoves, and hundreds of other goods.
The two countries have been in a tit-for-tat trade war, with each side imposing retaliatory measures. The US has said it will not back down, and Trade Representative Jamieson Greer has vowed to take further action. Meanwhile, Canada's unions have been vocal supporters of the countermeasures, with Unifor national president Lana Payne saying that Canada should "fight back" against Trump's tariffs.
The trade tensions have also led to a pause in antitrust work between the US and Canadian governments, with the US Justice Department instructing its officials to halt cooperation on cases and policy issues. However, the DOJ later disputed this report, saying it was just a temporary hold on one meeting.
As Canada prepares to implement its tariffs starting Tuesday, trade watchers are warning of an escalating war that could have significant economic consequences for both countries.
Written for “US Canada Trade Dispute Escalation” on 2026-09-07,
grounded in this article and the 5 other(s) covering the same event.
Canada’s retaliatory tariffs are set to take effect on Tuesday and with an American response almost inevitable, trade watchers are warning Canada should prepare itself for economic pain.
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Canada → set → pain
“We may be in an escalating war, and the question is who’s going to have the greater threshold for pain in this, and are Canadians ready for it because it’s going to be painful,” said Fen Osler Hampson, professor of International Affairs at Carleton University.
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Hampson → escalate → University
“I think it may be too early to go back to the table because the Americans will simply throw the same demands at us, and you know if they were unacceptable first-time around, are they going to be more the second time around?
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they → think → us
” said Hampson.
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Hampson → say → ?
Negotiations between Canadian and American officials have remained stalled since Aug. 21, after Prime Minister Mark Carney paused trade talks with the U.S.
As a result, a 50 per-cent U.S. tariff on nearly $28 billion worth of Canadian goods has come into effect, under Section 338 of the Tariff Act of 1930.
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tariff → remain → 1930
In response, Carney intends to impose retaliatory tariffs ranging from 15 to 50 per cent on $27.6 billion worth of U.S. goods.
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Carney → intend → goods
United States Trade Representative Jamieson Greer has said the U.S. has drawn up potential options to respond to Canada’s tariffs.
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U.S. → say → tariffs
He told Fox News last Thursday that negotiations remain stalled, but he has exchanged a few texts with the Canadian side.
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he → tell → side
Carney and Canada-U.S. Trade Minister Dominic LeBlanc have both expressed a willingness to return to the table, but only with a change in “attitude” on the American side.
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Carney → express → side
“I don’t see in the language from Carney and LeBlanc that would lead me to think that they have left themselves room to back down, and I also think there’s too much political advantage to them within Canada to keep the line that they’re taking,” said Mark Warner, trade lawyer at Maaw Law.
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Warner → see → Law
“The only position they seem to have left themselves open for is for the American president, in this case Trump, to basically fall on his own sword and say, ‘Okay, you win,’ and that’s just not going to happen,” he added.
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he → seem → sword
Brian Clow, former deputy chief of staff to prime minister Justin Trudeau, said there is a possible scenario where the increased escalation could bring the two parties back to the negotiation table.
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escalation → say → table
“I’m not betting on that,” said Clow.
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Clow → bet → that
“I certainly wouldn’t bet my house on that, but it’s possible, and it’s one of the scenarios here
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it → bet → scenarios
Clow also said it was significant that Trump’s first retaliatory response after talks broke down was to threaten an increase in tariffs on Canadian autos and trucks in January, a full four months from now.
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talks → say → January
“That is telling and shows that he can’t go too far on his tariff policies,” he said, adding that it would be interesting to see how the U.S. responds on Tuesday.
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U.S. → show → Tuesday
Hampson said Canada’s trade conflict with the U.S. could have a “compounding” effect on domestic pressures that are already facing the president, including the Iran war, inflation, a slowing economy and ongoing issues with the U.S. bond market.
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that → say → market
On the political front though, Clow said the impact of the upcoming U.S. midterms in November on Trump’s tariff agenda is “overstated.”
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impact → say → agenda
“I’m not saying there’s no impact, but I I think some people are putting too much optimism or confidence that the House of Representatives flipping to the Democrats will somehow, therefore, resolve the tariff issue,” he said.
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he → say → issue
Carney is likely to face his own domestic economic pressures.
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Carney → face → pressures
University of Calgary professor and economist Trevor Tombe has estimated 87,000 Canadian jobs could be at risk from the 50 per-cent Section 338 tariffs.
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jobs → estimate → tariffs
The Canadian retaliatory tariffs could also raise costs for Canadians, with Tombe estimating $250 in additional costs per year for households with children.
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Tombe → raise → children
Still, Carney holds significant political capital, and polling suggests Canadians support the prime minister walking away from a bad deal.
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minister → hold → deal
Warner said polled Canadians believe they can withstand the pain from tariff escalation with the U.S., but he wonders how long that could last.
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that → say → U.S.
“So the question is, what does that mean as it (trade war) starts to bite more?” he said.
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he → mean → what
