Canada to Rethink US Trade Ties Amid Rising Tensions

PM Mark Carney says Canada will fight back after Trump's car tariffs spark economic row

Canada’s Prime Minister Mark Carney has declared the country’s long-standing trade and security relationship with the United States “over”, following a major escalation in tensions sparked by Donald Trump’s 25% car import tariffs.

The End of a Close Partnership

Speaking from Ottawa, Carney said the once-tight bond between Canada and the US—built on trade, military cooperation, and shared values—had broken down.

“The old relationship… is over,” he said.

Carney warned that Canada must rethink its economy and look for more reliable global trade partners, as the US can no longer be trusted to support mutual economic growth.

Trade Deal Renegotiation on the Horizon

The Prime Minister announced plans for a full renegotiation of the USMCA (United States-Mexico-Canada Agreement), a key trade deal that has defined North American commerce in recent years.

Canada will respond to Trump’s tariffs with retaliatory trade measures, carefully designed to hurt US industries while protecting Canadian businesses as much as possible.

Auto Industry in the Crossfire

Trump’s latest 25% tariff on imported vehicles, even those partially made under USMCA rules, poses a serious threat to Canada’s auto sector, which is tightly linked with US supply chains.

Carney acknowledged the Canadian car industry could survive but said it needed to:

• Rebuild supply chains
• Find new export markets
• Reimagine and retool for a more self-reliant future

Shares in US carmakers also took a hit following the announcement. General Motors stock fell by 7.4%, and Ford dropped by 3.9%, showing the tariffs may backfire on US firms too.

A Warning from Canada’s Central Bank

Tiff Macklem, Governor of the Bank of Canada, has warned that the trade war could push Canada into a recession. He said:

“The uncertainty alone is already causing harm.”

In response, the Bank of Canada has cut interest rates again to help cushion the economy from further shocks.

Canada Looks to Europe for New Trade Deals

In a show of shifting priorities, Carney recently visited London and Paris to strengthen ties with European nations and diversify Canada’s trading relationships beyond the US.

He stressed the need to build an independent future, saying:

“We will fight back with everything we have to get the best deal for Canada.”

More Talks to Come

Carney said he would speak with Trump directly in the coming days. Canadian ministers may also travel to Washington to meet US counterparts.

He warned that Trump’s tariffs won’t just damage Canada—they’ll also hurt American workers and consumers through higher costs and disrupted supply chains.

Final Thoughts

Canada is entering a new era of trade and diplomacy, moving away from reliance on the US and preparing to face uncertain global markets head-on. The coming weeks could define the country’s economic direction for years to come.

Source: (FT.com)