A Trade War

Good morning from London, where the flowers in the Festival Gardens outside St. Paul’s Cathedral are thriving despite the summer’s heat.

I want to start, though, elsewhere in the Commonwealth.

A Canadian club

The trade war between the United States and Canada escalated this morning, as Canada imposed retaliatory tariffs of up to 50 percent on American goods. Talks between the two countries fell apart last month.

The tariffs went into effect shortly after midnight. They cover about $20 billion per year of imports from the United States, including goods like clothing, steel and cheese. That amount mimics the tariffs President Trump imposed on Canadian goods. For now, only a small portion of the annual trade between the countries is affected. “The more pressing concern is a potential cycle of retaliation,” my colleague Tony Romm reports.

Trump has already threatened additional tariffs on Canadian-made cars and trucks. He suggested last week that he might halt bilateral trade outright. Then, last night, he took to social media to single out Bombardier, a Canadian plane manufacturer, claiming there would be “NO MORE SELLING BOMBARDIER IN THE UNITED STATES!”

The dispute is fracturing one of America’s closest alliances, and it is not expected to end soon. When Canada left the talks last month, Carney said his country was “at war.” Canadians stood with him: 75 percent of those polled said they supported his decision to exit.

But if Canadians are on a war footing, American officials say they are not. “I don’t think you can be in a tit-for-tat with someone who’s 13 times larger than you are,” Scott Bessent, the treasury secretary, said in an interview on CNBC. The strategy, it seems: Might makes right.

What’s happening

Carney took power in Canada early last year on a promise to be tough on Trump. “Elbows up” was one of his campaign slogans, a hockey reference that applied to American tariffs, too. His antagonism only grew in office. At the World Economic Forum in Davos, Switzerland, this year, he delivered a speech deriding the hegemony of the United States.

“Every day we’re reminded that we live in an era of great-power rivalry,” Carney said. “That the rules-based order is fading. That the strong can do what they can, and the weak must suffer what they must.” And he delivered a stark warning: “The middle powers must act together because if we’re not at the table, we’re on the menu.”

Canada has very much been on the menu. We’re a long way from 2016, when former President Barack Obama and former Prime Minister Justin Trudeau brought their bromancy message of hope and change to a televised press conference in the Rose Garden.

Trump has since made claims on Canada as the 51st state and is threatening to tear up longstanding agreements between the two countries. And, of course, he has levied these tariffs that are debilitating some of Canada’s key industries, such as cars, steel and lumber.

The political is personal

Just as a reminder: A tariff is a tax your government charges people and companies in your country for buying goods from a foreign nation. That tax is often passed on to consumers in the form of higher prices. To avoid it, sometimes companies simply stop importing goods from the tariffed nations and look for them elsewhere. That’s happening on both sides of the border.

In the U.S.: Imagine, for instance, that your kid plays goalie on a youth hockey team in Minnesota. Thanks in part to tariffs, a goaltender’s helmet that ran $400 in 2022 now costs $1,000. “If a kid on the ice breaks a stick, every other parent is looking at that mom or dad going, ‘Ahhh oh, no!’” one parent told The Independent. “You feel for them. How many $400 sticks can you afford in one season?”

In Canada: Or pretend you’re a honey producer in southern Alberta and need wood from the U.S. to build your hive frames. For one farmer, an order of $32,500 in Montana pine now costs roughly $8,100 more. “We are the sacrificial pawn,” he told The Times.

The examples get smaller and more absurd. Ian Austen, a Canadian who has covered the country for The Times for decades, offered some funny illustrations of that. “Canada is targeting makers of those tiny ID bands that clamp to the legs of migratory birds,” he told me. The United States is targeting false beards and eyebrows made in Canada.

Why? “This has little to do with either country’s economy,” Ian said. “This is politics.”

The response

Canada is fighting back. Ian said yesterday that the conflict had brought Canadians together in a way that has little precedent. The tariffs may hurt Canada more, certainly in the short term. But there is national pride at stake.

“High on the list of popular priorities is punching back by all available means. That includes individual acts,” he said. “Any Canadian planning a visit to the U.S. now should probably keep it to themselves unless they enjoy awkward, or even confrontational, dinner-table conversations.”

Amid the tariff war, some Canadians may still want to visit the Detroit Institute of Arts and the George Eastman Museum in Rochester, Ian allowed. “But I know that many people here see that as almost treasonous.”

Read more about the trade war here.

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