Escalated U.S.-Canada trade talks threaten fallout

America's path to lower inflation depends in part on trade wars and actual wars becoming less economically disruptive.

In recent days, both have taken turns that threaten the opposite.

Why it matters: A period of relative calm on those fronts is now giving way to renewed tensions, with Canada, China and Iran all posing fresh economic risks.

What's going on : The U.S.-Canada trade fight is shaping up to become an all-out trade war, threatening economic and political fallout on both sides of the border.

Neither side is backing down, with Canada expected to target politically sensitive U.S. sectors with tariffs in the run-up to the midterms.

The Trump administration reportedly plans to impose an additional 7.5% tariff on Chinese goods in the weeks ahead over allegations that the world's second largest economy is flooding the globe with its goods, Bloomberg reports .

Treasury Secretary Scott Bessent is expected to announce a new round of sanctions on Monday that President Trump has described as "economic D-Day," focused not just on Iran itself but on other countries and entities that do business with the nation, per a Reuters report .

Zoom in: U.S.-Canada trade talks collapsed Friday night , triggering 50% tariffs on roughly $20 billion of Canadian goods, including wine, cement and dairy products.

Unlike earlier rounds of Trump tariffs, the new duties don't spare goods compliant under the U.S.-Mexico-Canada Agreement , eliminating an exemption that had kept much of the bilateral trade relationship untouched.

Already Monday morning, Trump says the U.S. will double car and truck tariffs to 50%, though the duties won't take effect until 2027.

It was a swift reversal.

Trump announced that the two countries were nearing a deal three days earlier.

Negotiators spent weeks hammering out the details with pleasantries along the way. (For instance, talks stretched through Trump's top trade negotiator Jamieson Greer's birthday and his Canadian counterparts gave him a card.) Zoom out: Over the weekend, both sides blamed the other for the talks blowing up.

Canadian Prime Minister Mark Carney said Washington introduced unacceptable last-minute demands, while Greer on CNBC Monday morning accused Canada of seeking additional concessions after the two sides had reached the outline of a deal.