On August 21, US-Canada trade talks collapsed.
Mark Carney suspended the negotiations, blaming last-minute changes to Washington’s terms.
The following morning, the United States imposed 50 percent duties on C$27.6 billion (about US$20 billion) of Canadian goods, including products across steel, building materials, alcohol, furniture and clothing.
Canada had to respond of course, and they have matched them dollar for dollar.
On September 8, counter-tariffs of 15, 25 and 50 % will take effect across roughly 700 product categories and the same C$27.6 billion of American imports, including steel, dairy, appliances, agricultural machinery, paper and electronics.
Prime Minister Carney’s language was also notable in how it deviated from his normal cordial tone.
On this occasion, he escalated beyond the normal vocabulary of trade disputes.
“You’re at war when you get attacked. We got attacked.”
The conventional framing is that Canada is the smaller economy and therefore the weaker party, forced eventually to fold.
Although that is largely true of course, that framing still misses two things.
1) Canada holds concentrated leverage over inputs whose prices American voters feel directly.
2) And the political will to sustain the confrontation currently runs in the opposite direction from the economic balance: Canadian voters reward resistance, while most American voters oppose the dispute.
This cable will therefore analyze the cards that Canada holds.
We will also analyze the asymmetry that makes them more dangerous to Trump than the aggregate trade numbers suggest.
U.S. - Canada Trade War: Carney Has Cards To Hurt Trump
