Category: Associated Press

TORONTO — For decades, Canada built much of its prosperity on privileged access to the United States. Now, after the collapse of trade talks, one of the world’s closest and most durable alliances has been fundamentally altered, with both countries facing the risk of a full-scale trade war.

Prime Minister Mark Carney acknowledged the break after last-ditch negotiations failed Friday, saying Canada had recognized that “America has changed” and that the countries would “not return to our old relationship.”

The United States imposed 50% tariffs on about $20 billion worth of Canadian goods early Saturday. Carney said Canada would retaliate dollar for dollar beginning Sept. 8, targeting sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

Carney foreshadowed the shift at the World Economic Forum in Davos in January, declaring that the world was experiencing “a rupture, not a transition” and urging countries such as Canada to reduce their vulnerability to economic coercion by strengthening their economies at home and diversifying abroad.

He said in Ottawa on Saturday that warning had been borne out. He accused the U.S. of using “economic integration as a weapon” and said its “signature was written in pencil.”

“The collapse of the tariff talks points to the fact that the old Canada-U.S. relationship is over and, for many Canadians, it also confirms the perception that Canada can’t trust the Trump administration,” said Daniel Béland, a political science professor at McGill University in Montreal.

The pressure from Republican President Donald Trump has gone well beyond tariffs.

He has questioned Canada’s economic viability, repeatedly talked about making it the 51st U.S. state, and used trade measures to encourage production to move from Canada to the United States. That has angered many Canadians and fueled a sense of betrayal in a country that had long regarded the U.S. as its closest ally.

Canadian travel to the U.S. remains sharply lower than before the dispute, with July return trips down nearly 29% by car and 27% by air from July 2024, Statistics Canada said.

The failed negotiations underscored how far the relationship had shifted. Canada had been prepared to accept some U.S. tariffs for market access and greater certainty — a break from decades of policy aimed at eliminating trade barriers.

For Canadians accustomed to preferential access under the 1989 Canada-U.S. Free Trade Agreement, NAFTA, and its successor, even reduced tariffs would mark a retreat from the old relationship.

The collapse also puts Carney’s approach to Trump to the test.

The prime minister’s “elbows up” posture — hockey shorthand for playing aggressively and refusing to be pushed around — has helped keep him popular at home. His decision to resist U.S. pressure could also resonate abroad with those impressed by his Davos call for countries to resist economic coercion and reduce dependence on great powers.

Provincial and conservative leaders broadly backed Carney. Saskatchewan Premier Scott Moe said, “The old status quo is not possible,” while Ontario Premier Doug Ford praised Carney for rejecting what he called a bad deal for the auto, steel, and manufacturing sectors.

Ford said Trump “is not to be trusted whatsoever.”

Former Alberta Premier Jason Kenney said Canada was “not cravenly surrendering in the face of constant economic and political aggression.”

Lana Payne, national president of Unifor, Canada’s largest private-sector union, accused Trump of trying to weaken Canada’s industrial base.

“What we have seen from the U.S. administration, or Donald Trump, is this consistent attempt to try and destroy the industrial economy of Canada with tariffs that have been strategically designed to attack us,” Payne said.

Economic risks of fighting back and a shift seen as perhaps lasting

Nearly three-quarters of Canada’s goods exports go to the United States. The U.S. economy is roughly 10 times larger than Canada’s, limiting Ottawa’s ability to retaliate dollar for dollar without inflicting disproportionate damage at home.

Royal Bank of Canada economists estimate the tariffs directly affect about 0.4% of Canada’s GDP because they cover only about 5% of Canadian exports to the U.S. The damage could grow if retaliation broadens, more sectors are targeted, or the dispute curbs investment and disrupts supply chains.

Carney himself acknowledged the cost of retaliation, saying the Canadian measures would “raise costs and reduce choice for Canadians.” He said his government would announce additional assistance for affected businesses and workers.

Béland said the countries were witnessing “the beginning of a full-scale trade war,” though he cautioned that the situation could change rapidly.

The dependence is not one-sided.

Carney said Canada supplies 99% of U.S. natural gas imports, 85% of its electricity imports, and 60% of its crude oil imports. Trump has focused much of his pressure on autos, steel, and aluminum, fueling resentment among Canadians who see the push as an effort to hollow out key industries.

Goldy Hyder, president and CEO of the Business Council of Canada, said businesses still view the U.S. as Canada’s most important trading partner but increasingly see the shift as lasting beyond Trump.

“There is a new trade and investment model, one that could well be kept in place by future U.S. administrations whether Democrat or Republican,” Hyder said.

Canada looks beyond U.S. because ‘things will never be the same’

The breakdown adds urgency to Carney’s push to diversify beyond the United States. He has traveled abroad seeking investment and new trade ties, aiming to attract $1 trillion Canadian (US$730 billion) by 2030 and to double non-U.S. investment over the next decade. Canada has signed more than 20 trade and security agreements across five continents in the past year.

That made Washington’s effort to restrict Canada’s ability to negotiate trade agreements with other countries particularly significant.

In July, Ottawa and Alberta advanced plans for a new Pacific Coast oil pipeline to give Canadian crude greater access to Asian markets and reduce reliance on U.S. buyers.

The immediate question is how long the latest tariff confrontation will last.

Béland said the deeper change probably will, partly because U.S. protectionism is likely to remain influential under future administrations.

“The idea that things will return to ‘normal’ once Donald Trump leaves the White House is probably just wishful thinking,” Béland said. “It doesn’t mean the relationship might not improve in the future but that things will never be the same.”

The new leader of Iran’s top security body is threatening neighbors against joining new U.S. efforts to squeeze Tehran’s economy. Egypt is trying to revive Iran-U.S. negotiations. And Iraq and Iran say Tehran has helped some ships carrying Iraqi oil to transit the Strait of Hormuz. France and Saudi Arabia are expected to discuss plans to bypass the waterway.

Meanwhile, Israel has carried out strikes in Syria and in Gaza.

Iran’s new top security adviser issues threats

The hard-line new leader of Iran’s Supreme National Security Council threatened Tehran’s neighbors against joining the new U.S. effort to hurt Iran’s economy, and accused the United States of increasing global nuclear insecurity with months of war.

“If (Trump) wants to do something, we will retaliate in a seismic manner,” he said in an interview with the state broadcaster that aired Saturday.

Mohsen Rezaei was named this month as part of senior appointments widely seen as hardening Tehran’s political and military stance. His interview with IRIB is his most extensive public statement since then.

Rezaei said Iran would target oil-shipping routes out of the Persian Gulf — alternatives to the Strait of Hormuz — if neighbors join what he described as the economic war against Iran. Those neighbors would be considered enemies and “we will target their interests,” he said.

U.S. President Donald Trump in the past week has vowed to increase Iran’s pain by imposing an “unprecedented” level of economic warfare and isolation. Iran has lived under sanctions for years.

Rezaei said discussions with Oman, located on the other side of the strait, over management of it were ongoing, and said fees would be imposed. Iran asserted control over what was seen as an international waterway shortly after the U.S. and Israel attacked on Feb. 28.

Rezaei also vowed to make changes to Iran’s diplomacy and bring new capabilities to what he called the next war. He warned the U.S. against sending more military personnel to the region, and said the U.S. had increased nuclear insecurity because countries see that participating in international monitoring efforts, as Iran has done, is no protection against attack.

Egypt tries to revive U.S.-Iran negotiations

The top diplomats for Egypt and Iran discussed efforts to bring Tehran and Washington back to the negotiating table to settle the war, Egypt’s foreign ministry said.

Iranian Foreign Minister Abbas Araghchi and Egyptian counterpart Badr Abdelatty also discussed the Iranian-Omani talks, the ministry said.

Araghchi briefed Egypt’s foreign minister about “Iran’s view of ongoing developments, the course of negotiations and their challenges,” the ministry said, without elaborating. Araghchi confirmed the call. Separately, Araghchi said he had a call with Pakistan’s army chief, Field Marshal Asim Munir,

Iran and Iraq say some Iraqi oil is facilitated through the strait

The governments of Iraq and Iran said Tehran has helped some ships carrying Iraqi oil to transit the Strait of Hormuz, a key waterway for global oil, natural gas, and other supplies, but there were few details.

“There is facilitation for some ships carrying Iraqi oil in the Strait of Hormuz,” Iraqi President Nizar Amidi said in comments published Saturday by the state-run news agency, adding that Iraq doesn’t have a national carrier for transporting oil.

Iran’s state-run IRNA news agency said a number of Iraqi oil tankers have been permitted to transit. It was not clear how many or what Iran might have received in return.

Syria says an Israeli drone strikes inside a village

An Israeli drone strike on a vehicle wounded one person on Saturday in the southwestern Syrian village of Beit Jin, according to the Syrian state news agency SANA. Syria’s foreign ministry said several civilians were injured and called the strike a flagrant violation of the country’s sovereignty.

The Israeli military said it targeted a “terrorist who advanced terror attacks in final stages of preparation,” without elaborating. It wasn’t immediately clear if it was the same strike.

Israel has carried out hundreds of airstrikes around Syria after the ouster of former President Bashar Assad in late 2024, mainly destroying army assets to keep them out of the hands of his successors.

Messages differ on the Golan Heights

In an interview on Friday with Mario Nawfal, a Lebanese-Australian entrepreneur, U.S. Ambassador Tom Barrack said Israel “still” occupies the Golan Heights in violation of U.N. resolutions.

Israeli Defense Minister Israel Katz on Saturday in a statement called Barrack’s remarks “full of inaccuracies and positions that contradict Trump’s own position.”

Israel captured the Golan Heights from Syria in the 1967 war and annexed it in 1981. The U.N. considers the territory occupied Syrian land. But in March 2019, Trump signed a proclamation recognizing Israeli sovereignty over the Golan Heights, reversing decades of U.S. policy.

French president, Saudi crown prince will meet

French President Emmanuel Macron and Saudi Crown Prince Mohammed bin Salman are expected to discuss plans to develop alternative routes to the Strait of Hormuz during the Saudi leader’s two-day visit to Paris that starts on Sunday, according to officials in the presidency who weren’t authorized to be publicly named.

Proposals include increasing trade through Omani ports outside of the Persian Gulf, expanding or doubling pipelines in Saudi Arabia and elsewhere, and developing new rail links, the officials said.

France and Saudi Arabia have formed a task force on energy and logistics connections between the Middle East and Europe that is scheduled to meet at the ministerial level Monday. The officials said the work would focus on identifying the most strategic projects, securing financing, and establishing roles for French companies.

An Israeli strike in Gaza kills 1 Palestinian

An Israeli strike on the backyard of a house in central Gaza killed one Palestinian and wounded another Saturday, according to health officials at Al-Aqsa Martyrs hospital.

Israel’s military said it targeted Sharif al-Hasanat, a Hamas commander who “advanced terror attacks and took part in efforts to restore Hamas’ underground infrastructure.” Days earlier, a U.S. negotiator reportedly asked Israel to draw down attacks while seeking to make progress on the ceasefire.

UNITED NATIONS — The United States has demanded that Cuba open up to private investment, and Cuba has passed sweeping reforms to encourage just that. So Cuba’s U.N. ambassador says he wants to know why Washington keeps piling on sanctions that stymie the very economic opening it has sought for decades.

Ambassador Ernesto Soberón Guzmán, in an interview this week with the Associated Press, directed his question to U.S. Secretary of State Marco Rubio, the main architect of the Trump administration’s Cuba policy:

“What are you afraid of? If you are so convinced that the Cuban government is an incompetent government, why do you need to implement almost every two weeks new sanctions?”

The U.S. State Department responded to a request for comment with a quote from Rubio saying new sanctions will continue to be announced every couple of weeks to close off “escape valves that they’re trying to create in every mechanism.”

Then on Thursday, the U.S. imposed more economic penalties on Cuban industries, targeting state-owned mining, metal, and construction companies.

Cuba has been pushed to the brink by an oil blockade imposed by the United States in January on top of a decades-old embargo, coupled with the escalating sanctions. The moves by President Donald Trump’s administration, meant to put pressure on the government by depriving it of funding, have worsened already debilitating blackouts, cut workers off from public transport, crippled infrastructure, and deepened shortages in medicine and food in the Caribbean island nation.

Guzmán said the sanctions are the main obstacle to Cuba opening up its economy. He said the impact of the U.S. measures — specifically the shortage of electricity and lack of fuel to run a business or travel — has turned off investors and tourists, a major source of Cuba’s income.

Some companies have pulled out of Cuba, including the Spanish hotel chain Meliá, which relied on tourist revenue and cited “significant operational, legal, economic, and financial difficulties” in explaining its decision to leave.

”Literally, the United States has done everything imaginable to try to prevent foreign investors,” said William LeoGrande, a professor at American University and a leading expert on U.S.-Cuba relations. ”When they say, `Well, we want to see Cuba open up to foreign investment,’ they’re being disingenuous. … It’s not possible for them to succeed without some kind of sanctions relief.”

The goal of Trump’s Republican administration, he said, is “not just to open up Cuba economically but to overthrow the Cuban government — to change the nature of the Cuban political system.”

Cuba announces major economic shift

John Kavulich, president of the U.S.-Cuba Trade and Economic Council, said Cuba had to make changes when it lost its economic lifeline with the U.S. ouster in January of Venezuelan leader Nicolás Maduro.

“The result is the Cuban government in the last eight months made more commercial, economic, and financial changes to the country than they have as a group since the revolution,” he said.

Nonetheless, the Trump administration keeps ratcheting up sanctions, putting more pressure on Cuba, which is responding by making more changes, Kavulich said.

“But from our standpoint, there are two parts missing: One is Cuba implementing by regulation everything that it’s announced, and secondly, the Trump administration allowing U.S. companies to have more access to the Cuban marketplace while these changes are underway,” he said.

The changes announced by Cuban President Miguel Díaz-Canel in June aim to significantly shift Cuba’s economy and industry, which have been strictly controlled by the socialist government since the 1959 revolution.

They include more space for private businesses, imports and exports without the state as an intermediary, free hiring of personnel, authorization for private banks, investment by Cubans abroad, and opportunities for fast-food chains to establish themselves on the island.

Guzmán said there are opportunities for investments in real estate, solar farms, and energy to help ease the country’s electricity shortage, as well as in marinas and the tourism industry.

Christopher Hernandez-Roy, acting director of the Americas program at the Center for Strategic and International Studies, recalled that the last economic opening under President Barack Obama’s Democratic administration “was later throttled by the Cubans themselves, who feared that the opening went too far and appeared to threaten political control.”

Today, he said, it appears the Cubans really do want economic reforms and outside investment. Díaz-Canel’s economic reforms are not impossible, but U.S. sanctions “significantly constrain their prospects for success,” Hernandez-Roy said.

He noted the irony that U.S. pressure ”is helping push the Cubans toward greater economic liberalization out of necessity, while simultaneously limiting the resources and access necessary for those reforms to actually improve the economy.”

Rubio says Cuba’s leaders ‘don’t know what they’re doing’

In late June, after the reforms were announced, the U.S. slapped sanctions on five state companies, three linked to a business conglomerate run by Cuba’s Revolutionary Armed Forces. Best known as GAESA, it is believed to command nearly 40% of Cuba’s gross domestic product.

Rubio, a former U.S. senator from Florida whose parents were born in Cuba, did not appear to be impressed by the newly announced economic changes. He last month called Cuba “a failed state” with “a bad economic model.” He said Cuba’s leaders “don’t know what they’re doing” and “don’t know how to fix their economy.”

“I think the challenge that Cuba has faced for the last 15 years is they want to somewhat improve their economy, but they’re afraid that if they improve it too much they’ll lose political control over people,” he said.

The United States is prepared “to do what we can do to effectuate a positive change in Cuba because it directly impacts our national security” since it is only 90 miles from the U.S. mainland, Rubio said. “And we want Cuba to be prosperous. We want Cuba to be free.”

The Cuban ambassador said implementing the economic changes would be far easier without the sanctions, if American companies were involved in Cuba and if trade between the two countries was possible.

He said the good news is that talks are taking place between the United States and Cuba. He declined to give details of what he called “very sensitive conversations.”

“But the point here is that even when Cuba is changing a lot,” Guzmán said, “the U.S. government keeps the same policy of aggression towards the Cuban people.”