When tariffs turn allies against each other

Trade tensions are escalating between the United States and Canada after talks between the two longtime allies broke down.

From September 8, Canada will impose retaliatory tariffs on about US$20 billion worth of imports from the United States, responding dollar for dollar to new US tariffs on Canadian goods of a similar value.

Ottawa says the measures will affect hundreds of products, ranging from steel and aluminum to appliances, electronics and agricultural goods.

The breakdown came after Prime Minister Mark Carney said Washington had made last-minute changes to the terms of a proposed trade deal that were "unfair" and "uneconomic," raising questions about its reliability.

Words fly, rift deepens The United States and Canada have long been among the world's closest allies and trading partners.

Their economies are deeply integrated, while their political and security ties have endured for generations.

That is what makes the current confrontation so striking.

Carney used an unusually strong word to describe the dispute: "war." US President Donald Trump quickly fired back, accusing Canada of wanting the benefits of being a US state without actually becoming one.

The war of words has been accompanied by real economic pressure.

After trade talks collapsed, Washington imposed 50 percent tariffs on roughly US$20 billion worth of Canadian goods.

Trump has also threatened to impose further 50 percent tariffs on Canadian cars, trucks, auto parts and steel from January 1, 2027.

What was once a dispute over market access and tariffs is now testing the resilience of one of North America's most important economic relationships.

Canada pushes back Carney responded by announcing retaliatory tariffs on US goods beginning September 8.

Other Canadian leaders have also suggested targeting strategic exports, including energy and critical minerals, if tensions continue to escalate.