Category: News

TORONTO — Canada struck back at the United States on Tuesday with retaliatory tariffs on about $20 billion worth of American goods, including steel, dairy products, appliances, and farm equipment, as the trade war between the once-friendly neighbors escalated sharply.

The confrontation threatened one of the world’s largest trading relationships and further strained ties between the United States and a country long considered one of its closest allies. A prolonged dispute could raise costs for American businesses and consumers less than 2½ months before the midterm elections.

The new tariffs extended well beyond industrial goods, hitting everyday purchases such as seafood, cheese, clothing, cosmetics, and toilet paper, with some facing duties as high as 50%.

“We did not choose this conflict, but when our economic integration is used as a weapon rather than the foundation for a win-win partnership, we need to stand up,” Finance Minister François-Philippe Champagne said in French, calling the situation “an unprecedented challenge imposed on Canada.”

Industry Minister Mélanie Joly urged Canadians to buy Canadian goods, saying doing so would help protect jobs and launch a “movement of resistance.” She said Canada selected some American products for tariffs to put political pressure on particular U.S. states. Canadian officials used a similar strategy during Trump’s first term, when retaliatory tariffs targeted Kentucky whiskey, Florida orange juice, and Wisconsin yogurt.

Canada’s retaliation came after the Trump administration imposed 50% tariffs over the weekend on Canadian goods following the collapse of trade negotiations. Canadian Prime Minister Mark Carney accused Washington of trying to subordinate Canada and said U.S. demands during the failed talks showed that Americans wanted to “destroy our major industries.”

Trump told Canadian leaders to ‘fall in line’

Trump intensified the confrontation Monday, telling Canadian leaders to “fall in line” or face consequences “far WORSE” than existing tariffs and threatening new 50% tariffs on Canadian vehicles, auto parts, and steel.

Trump added another provocation Tuesday, saying the United States was giving “serious consideration” to renaming Lake Ontario “Lake America” in a feud with Ontario Premier Doug Ford. Such a change would be reminiscent of the Republican president’s unilateral action last year by executive order to rename the Gulf of Mexico to the Gulf of America.

In the hours before Canada’s announcement, Trump went on a social media tear against the country, accusing it of ripping off American farmers and driving American companies out of business.

“I deal with many countries, and Canada is easily the most difficult and unreasonable,” Trump wrote in one post. “They feel entitled, but they are not a State, and will be entitled no longer!”

Tariffs on many U.S. products would double

The tariffs will take effect Sept. 8 at rates of 15%, 25%, and 50%, with Canada matching the corresponding U.S. tariff rate on more than 700 products such as pulp and paper and electronics. The tariffs on many American products would double from 25% to 50%, with the largest share of the new measures affecting steel and aluminum.

Canadian officials said the goal is not to raise revenue but to protect Canadian companies and reduce U.S. imports.

U.S. steel imports, for example, have already fallen 30% since Canada imposed a 25% tariff, and the new 50% rate is expected to cut them further, Canadian officials said.

Goods facing 50% tariffs include some steel and aluminum products, furniture, and clothing. Appliances, dairy products including cheese, fish and seafood, and certain steel and aluminum derivatives will face 25% tariffs. Existing Canadian countertariffs on U.S. autos will remain in place.

Canada also announced a support package for workers and businesses affected by the dispute worth $7.5 billion in Canadian dollars ($5.4 billion in U.S. dollars).

Canadian officials acknowledged the counter tariffs will raise costs for some businesses and consumers but said they expect the overall economic effects to be moderate.

They said the government has provided more than $30 billion Canadian dollars (US$21.7 billion) in tariff-related support since the beginning of 2025 — far more than it has collected in retaliatory duties — as it tries to cushion the blow from the trade fight.

Countries have integrated supply chains

Canada and the United States have deeply integrated supply chains across autos, energy, agriculture, and manufacturing, making a prolonged trade fight potentially costly for businesses and workers on both sides of the border.

Businesses and consumers are caught in the middle, facing uncertainty about how much prices may increase.

Michael Howard II, owner of a furniture business in Warren, Mich., outside Detroit, said the tariffs will hamper the “ability for us to put food on the table for our family” and affect ”the ability for us to give back to our community.”

Howard and his wife started their business a decade ago. They make and sell everything from dining room tables to bookcases.

“To say that we don’t need Canada is just disingenuous,” he said. “It’s dishonest. And it’s just absolutely not truthful. We need our neighbor, but also they need us.”

On Monday, Carney said U.S. negotiators had raised objections to French-language content on streaming platforms and French-language labeling rules. He rejected the idea that those issues were negotiable, saying in French: “For the Americans, questions about the French language, Quebec culture, francophone culture, and Canadian culture are irritants. Here in Quebec, here in Canada, they are rights.”

In a social media post early Tuesday, Trump wrote: “I would never interfere with Canadians speaking French! In fact, I have never even thought of doing such a stupid thing. This lie was made up by a weak and ineffective Prime Minister in an attempt to gain political support, which he has totally lost, from the people of Quebec. I love French Canadians!”

The clock ticked toward midnight on Friday. New U.S. tariffs on Canada were about to come into effect and negotiators cooped up across the street from the White House were still plodding through the differences on each side. Aides shuffled in and out with new drafts, adjusting and readjusting.

U.S. officials said they had offered Canada the best trade deal of any nation. Canadians believed it was a bad one. In the waning hours, both sides dug in even more.

One Canadian negotiator said it was as if “shadow figures were suddenly in the room,” raising topics that had supposedly been settled in previous days.

Back in Ottawa, Prime Minister Mark Carney got off the phone with Doug Ford, the premier of Ontario. Ford had told him plainly: Don’t take the deal.

Ford told Carney he would not comply with a key U.S. demand: restoring the sale of U.S. alcohol that he, alongside most other provincial leaders, had banned. American tariffs on Canadian steel and automobiles were still too high to enable their long-term survival, Ford had decided.

Carney called his team in Washington for the latest news from the negotiations. Then, just after 10:30 p.m., he pulled the plug and ordered them home.

A month of intense talks to stave off new U.S. tariffs on Canada and soften the ones previously imposed by the Trump administration had been yielding steady progress. But they collapsed suddenly, setting in motion an all-out trade war between the two nations.

The sticking points were many. In the last few hours, negotiators clashed over Canadian rules promoting French-language movies and shows online, as well as the Trump administration’s demands to dictate Canada’s steel tariffs on other countries. Canada, in turn, insisted on more generous treatment for its autos and electric vehicles, and ultimately backed away from its offer to cooperate on the Keystone XL pipeline that President Donald Trump has long desired, people familiar with the negotiations said.

On Monday, after the negotiations collapsed, Trump vowed to increase tariffs on all cars, trucks, car parts and steel from Canada to 50%, starting on Jan. 1. He called Canadian officials “clowns” from “among the worst Nations in the World to deal with.”

“WE DON’T NEED CANADA, THEY NEED US!” he wrote.

Carney fired back: “The attitude, at the negotiation table, that Canada is a subsidiary of the United States,” he said, “that’s not something we’re going to accept.”

Carney is now expected to announce Canada’s retaliation tariffs against the United States.

What led to the breakdown is a story of fundamental misalignment between the countries — ideological, economic and political. Ultimately, Carney decided to defy Trump and endure his economic and political targeting of Canada.

This account, which contains previously unreported details of the final days and hours of the trade negotiations, is based on interviews with five American and Canadian officials with direct knowledge of the talks, two former U.S. officials, as well as seven senior industry leaders on both sides of the border who were briefed throughout.

The interviews show that the red lines for the two sides were so far apart that it would have required major concessions, particularly by Canada, to come to a final agreement.

The zombie pipeline

“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” Trump said in an Aug. 18 social media post, in which he also claimed that the United States and Canada had a “DEAL!”

Trump’s love of the beleaguered pipeline extension, meant to transport oil from Canada to the U.S. Gulf Coast until it was canceled by Biden in 2021, is well known.

Carney had brought up the idea of reviving it during his first White House visit last year.

Officials said that, when Carney and Trump spoke by phone early last week, Carney again mentioned the pipeline, saying that, for the right deal on tariffs, Canada would consider bringing its side of the pipeline back to life. Trump was thrilled, a former official briefed on the talks said.

But by Friday, the Keystone XL pipeline idea was buried again. A U.S. official said that, in the last few hours, Canada had expressed reluctance to cooperate. A Canadian official said that the trade deal on offer was not good enough to make the pipeline make sense.

The Lutnick factor

Last Monday afternoon, with the talks still underway, Jamieson Greer, the U.S. trade representative, and Dominic LeBlanc, the Canadian trade minister, dodged reporters waiting in the Washington humidity as they left a roughly two-hour meeting at the Commerce Department.

Canadian negotiators were used to working closely with Greer, who oversees U.S. trade deals and helped negotiate the United States-Mexico-Canada Agreement during Trump’s first term. But many of the issues that Canadians cared about most were instead the purview of the man who stayed inside in the air conditioning: Howard Lutnick, the secretary of commerce.

Lutnick, a hard-charging former bond broker who has known Trump for decades, oversees the administration’s tariffs on cars, trucks, steel and aluminum. And in the coming days, he would take a hard line on those topics, issues that ultimately took down the talks.

Negotiators were hopeful to start that week. After Trump threatened last month to impose 50% tariffs on hundreds of products, the Canadians reached out to negotiate, asking for a comprehensive deal that resolved Trump’s earlier tariffs and his latest threats, a U.S. official said. Trump gave Greer a green light to see what the Canadians had to offer.

U.S. officials felt confident that they could get Canada to both scale back the retaliatory tariffs they had imposed against Trump and to remove what the United States saw as unfair barriers to agriculture, energy and digital trade.

On Aug. 18, U.S. and Canadian officials agreed on the outlines of a deal, and Trump proclaimed on social media that he had paused his tariffs until midnight Friday to finalize the paperwork.

But on Wednesday, as the two sides got into the details, particularly on metals and autos, snags emerged. Lutnick was wary of Canadian proposals that would lower the tariff on autos below the level he wanted.

As word leaked last week that the United States would reduce its tariffs on Canadian steel and aluminum, U.S. companies lobbied the Commerce Department and the White House to preserve their protections. Lutnick intervened on their behalf, including suggesting that only a certain volume of aluminum be subject to lower tariff rates.

After spending several days in negotiations, LeBlanc flew home to Ottawa on Wednesday afternoon. But early the next morning, he urgently returned to Washington, as did Marc-André Blanchard, Carney’s chief of staff.

Neither was scheduled to be in Washington that day, according to two people familiar with the events. They were rushing back because of Lutnick’s intervention.

Lutnick also insisted that tariffs not be lowered for heavy trucks, as they would be for cars. And Canada, which produces the GM Silverado and Ford F-350 and F-450 in Ontario, insisted this was a red line.

Lutnick’s interventions caused frustration inside the trade office, which had been in talks with the Canadians for weeks, one person close to the office said. The person said Greer did not disagree with Lutnick substantively, but he did not think the Canadians would accept the proposals.

A White House official said Lutnick’s hard line did not derail the negotiations. Kush Desai, a White House spokesperson, said that the entire trade and economic team was “playing from one playbook, President Trump’s playbook.”

The United States ultimately offered to reduce its tariffs on steel, aluminum and cars, and eliminate entirely a tariff on Canadian lumber imposed last year, Greer said in an interview Saturday.

For Canadians, Lutnick was already something of a villain. Though he is friendly enough to exchange text messages with Carney, he has offended many Canadians, including intervening to block the opening of a new Canada-U.S. bridge and saying that Canadian officials “suck” during an event in Washington in April.

Lutnick had also made clear that his goal was moving auto production out of Canada into the United States. Speaking virtually at a U.S.-Canada summit late last year, Lutnick told a Canadian audience that the United States was no longer interested in buying Canadian-made cars.

Sovereignty matters

For the Canadian team, a number of different issues came down to sovereignty.

On Friday, U.S. officials raised concerns about Canada’s future trade agreements and how they would guard against foreign products flooding into North America. They wanted to be able to review and potentially dictate the terms for Canada’s trade agreements with other countries, a Canadian official said.

Canadian negotiators had gone into the talks suggesting the ultimate goal should be to create a “Fortress North America,” as they called it, with ultralow or nonexistent tariffs inside its walls, namely between Canada and the United States, and aligned tariffs for outsiders.

But the United States wanted Canada to apply U.S. tariffs to other countries, particularly when it came to steel, now and in the future: If the United States changed policy and place higher tariffs on certain goods from a third country, Canada would need to do the same, even if it already had a trade agreement in place, a Canadian official said.

For the Trump administration, this was necessary to prevent, for example, cheaper steel from flooding third countries through Canada and into the United States.

But this was unacceptable to the Canadians, who are in talks on multiple trade deals with Latin American and other nations as part of Carney’s vision to diversify trade away from dependence on the United States.

A Canadian official also said that the U.S. side also wanted Canada to swiftly phase out a program it began last year to support industries impacted by U.S. tariffs, known as “Buy Canadian,” which prioritizes using domestic products and suppliers for public-sector projects — similar to a policy the United States implements to favor its own industries.

The Canadians also pressed the United States for a level of certainty that the deal would not be scrapped overnight by the Trump administration. But the United States maintained that it would retain all power to change tariff policy against Canada at any time, irrespective of the agreement, officials said. Carney would say in his seething Saturday address to Canadians: Sometimes, the United States signature is “written in pencil.”

Lost in translation

A particularly sore point in the talks, and one that has animated Canadians since they collapsed, was the suggestion by Carney that the United States wanted to intervene in Canada’s all-important policy to protect the use of the French language.

French, spoken mostly but not exclusively in Quebec, is one of Canada’s two official languages and bilingualism is government policy across the country. Different kinds of laws protect and guarantee the continued use of French in daily life, from labels on products to funding for the arts and education. Quebec would likely break away from Canada, as it has often threatened to, without such guarantees.

As part of the trade talks, Canada had agreed to review laws that protect Canadian-made online content, including French-language shows. On Friday, and until the final moments, the United States was asking Canada to repeal a law that would, among other provisions, compel streaming platforms to place such movies or series more prominently for Canadian subscribers.

The U.S. side, officials said, viewed such policies as an intervention in the platforms’ freedoms.

A person with direct knowledge of the talks said that the American side was flexible on this point, and did not make any asks regarding the French language explicitly. A Canadian counterpart said that, even if that were the case, the topic was still being debated until the last minute before the talks broke down Friday.

It would be one of many issues left unresolved, as Carney decided the concessions were unthinkable for Canada.

“We cannot accept what they have offered, and we will not give what they have asked,” he said.

This article originally appeared in The New York Times.

In declaring a new “economic D-Day” for Iran on Monday, President Donald Trump and Treasury Secretary Scott Bessent are reaching for yet another strategy to grope their way out of a military adventure gone wrong. Along the way they are reversing the usual approach to coercing adversaries to bend to American will.

Ordinarily, Washington approaches a problem like dismantling Iran’s nuclear program with straightforward diplomacy. If that goes nowhere, officials mix in escalating economic sanctions, adding an element of coercion. Military action is a last resort, and only if the president determines that risking American lives is worth the possible benefit.

But Trump leaped from a brief round of diplomacy straight to bombing runs, meant to force the country to give up its stockpiles of 11 tons of enriched uranium — including a batch that was nearly bomb-ready — and perhaps collapse the government. The attacks failed at both objectives, at the cost of 18 American lives, hundreds or thousands of Iranians dead, and a price tag that independent analysts put at over $100 billion, though the Pentagon’s estimates are lower.

And only now are Trump and Bessent trying one more grand experiment, named Operation Economic Outcast, that the White House described as “an unprecedented campaign to sever every remaining economic lifeline sustaining the Islamic Republic of Iran.”

The plan is not implausible. As described by Bessent, it involves choking off every last transaction that funnels money to Tehran, whether it is well-disguised digital transactions, or ship-to-ship transfers of oil, or the movement of gold around the globe. “This is a sustained operation to collapse every last option for Iran,” Bessent, who has become the public face of the effort at economic strangulation, said at a news conference at the Treasury on Monday.

But the effort raises a series of questions that the White House has not answered. First among them is why, if sanctions as airtight as these are possible, they were not employed before Trump ordered the U.S. military into battle, exposing shortages of key munitions and the limits of U.S. military power? And now that the military has, in Bessent’s words, “laid the groundwork” for success, what about China — which purchased more than 80% of Iran’s oil exports in 2025? Is the administration willing to risk another direct confrontation with Beijing, with which it is already at odds over artificial intelligence, Taiwan, a rapid nuclear expansion and a huge production overhang that threatens the global economy?

The original D-Day, on the shores of Normandy, did not require Chinese participation. This economic D-Day does, and there is no indication so far that it is forthcoming, a month before Chinese President Xi Jinping is scheduled to arrive in Washington for his first state visit in more than a decade.

“This will be tricky,” Peter Harrell, a visiting scholar at Georgetown Law School who has written extensively on the limits of economic sanctions, said on Monday.

Earlier this year, in deciding how to bring Iran to its knees, Trump “had a choice to really come down hard on the Chinese, which he didn’t want to do because of his own economic agenda with Xi, or put the naval blockade on the Iranian tankers,” Harrell noted. “It turned out it was politically easier to put the blockade on all the Iranian tanks than to tell the Chinese ‘We will sanction your big companies’ if they continued their trade with Iran.”

It is still a delicate issue.

Bessent threatened what are called “secondary sanctions” on all nations that continued to do business with Iran.

But in an opinion article for the Financial Times over the weekend and at his news conference Monday, Bessent never uttered the word “China.” He was going out of his way to avoid angering the world’s second-largest economy, and the one nation that may well determine whether this new White House strategy has a chance.

Of course, there is nothing new in trying to make Iran an economic outcast. The first serious efforts to impose sanctions on Iran for its nuclear program date back to the George W. Bush administration. When the Obama administration was trying to push Iran into negotiations in 2009, the secretary of state at the time, Hillary Clinton, promised “crippling sanctions” unless the country entered negotiations.

It took years to generate results, but many experts contend that the escalating sanctions that followed helped compel Iran to agree to the 2015 nuclear accord, sharply limiting its nuclear work in return for a lifting of financial and oil sanctions. Trump ripped up that agreement in 2018, declaring it deeply flawed.

At that time, he began reimposing sanctions, and he and his secretary of state, Mike Pompeo, predicted that the economic pressure would be too much for Iran’s leaders to take.

“The Trump administration is pursuing a ‘maximum pressure’ campaign designed to choke off revenues that the regime — and particularly the Islamic Revolutionary Guard Corps, part of Iran’s military that is directly beholden to the Supreme Leader — uses to fund violence,’’ Pompeo wrote in Foreign Affairs in late 2018. “Yet President Trump does not want another long-term U.S. military engagement in the Middle East.”

Pompeo, now estranged from Trump, sounded many of the themes repeated by Bessent on Monday. The exception is that the United States is now committed to a military presence off Iran’s coast for an indeterminate amount of time, but certainly as long as Iran threatens shipping through the Strait of Hormuz.

The record of these past sanctions is unimpressive: Iran kept shipping 2 million to 3 million barrels of oil a day despite them. Those numbers have now come down to a trickle, thanks to the naval blockade now in place.

But the nuclear material has not moved out of its rubble-covered storage sites since the United States bombed those areas in June 2025, satellite photographs indicate. And the government survives, though under different management after Ayatollah Ali Khamenei was killed in the opening strikes of the war in February. His son, considered more of a hard-liner, now holds the post, even though he has not been seen or heard from directly.

As a result, one of the more curious elements of Bessent’s speech Monday came when he returned to a promise made by Trump nearly six months ago: that he would establish the conditions for regime change.

At the time, Trump thought the military battle would last a few days or weeks, before Iran offered what the president called “unconditional surrender.” He urged the Iranian people to rise up, and take over their government, after the smoke of the U.S. bombing cleared. Trump soon abandoned that effort, acknowledging in an interview with The New York Times in June that the Iranian people simply did not have the guns or organization to make that happen.

Bessent tried a slightly different approach Monday.

“To the ordinary soldiers supporting this regime,” Bessent said, “as more and more of your paychecks stop or are supposedly just delayed, ask whether your commanders are leading your country to triumph or to ruin, and recall that the Berlin Wall fell when ordinary soldiers decided not to shoot at their own people.”

Of course, the circumstances when the wall fell were entirely different from those in Iran. There was no external, active war going on, just the accelerating pressure of the Cold War. And the Soviet Union and its satellites saw little hope in putting down the local uprisings, including the one in East Germany that led to Bessent’s historical analogy.

Yet that is Trump’s big bet right now. His decision in February to forgo the kind of sanctions announced Monday, and to move right to military force, was in some ways an acknowledgment that economic sanctions move slowly, and that history suggests they often fail to work.

Today, he is back to that plan, for absence of many other viable choices.

This article originally appeared in The New York Times.