A Manufactured Trade War with Canada

Perhaps more "allied" countries than we thought are currently led by people who are -- for all intents and purposes -- agents of the People's Republic of China.

John F. Di Leo | September 10, 2026

As we enter general election season, we have disruptions in the news and in the economy: a nagging USA-Canada trade war that seems to accelerate at the worst possible times.

In August, the Canadians walked away from a trade agreement to which their negotiators had already agreed, when Prime Minister Mark Carney recalled them specifically to create a fight.

The USA therefore imposed a series of new/increased tariffs on Canadian goods, and Canada then responded by imposing their own new/increased tariffs on American goods (both of which would theoretically cover approximately $20 billion/year in goods).

In judging the impact of such an economic hit, it's important to note the differences between our respective economies, as well as the differences in how much activity we have with each other.

USA firms import about $400 billion per year in goods from Canada, so the products affected by the new USA tariffs are only about 5% of that. By contrast, Canadian firms import about $260 billion per year from the USA, so the tariffs they've just imposed affect a larger percentage of their imports, about 7 to 8 percent of them.

That might not feel like a big deal, but we need to remember that tariffs are used as attacks on the exporting country, but the people who really "feel the pain" are the importers who pay the tariffs in the end. So, this reciprocity hits Canadian firms harder than American firms.

A more important fact to remember, though, is that Canada is far more dependent upon American goods than the USA is on Canadian goods. The USA is the origin of somewhere between a third and a half of Canada's global imports. Canada cannot win a trade war with the USA. By having a trade war with us at all, Canada loses, no matter what.

So the question would seem to be, why did Carney start........

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