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<\/p>\nThe US-Canada trade war: What happened and what\u2019s next?<\/p>\n
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The United States and Canada, for generations among the world\u2019s closest allies, have slid into a full-blown trade war in recent days as long-running negotiations stalled.<\/p>\n
Although the nations\u2019 cratering trade talks seemed sudden, the neighboring countries have been at loggerheads for much of President Donald Trump\u2019s second term, as he has played economic hardball on trade. Trump had already imposed U.S. tariffs on Canadian automobiles, aluminum and steel. In July, he threatened<\/a> to impose new tariffs on Canada because its wildfires were sending smoke into the U.S. And in July, he said a new round of 50% tariffs on hundreds of goods would take effect in 30 days. That pushed negotiations into high gear.<\/p>\n In recent days, both sides blamed the other for making last-minute demands<\/a>. The Trump administration rejected<\/a> Canada\u2019s insistence on lower tariffs on heavy trucks<\/a>, promoting Canadian and French-language content in streaming services, subsidies for publishing and films, and French-language labeling of products sent to Canada.<\/p>\n U.S. Trade Representative Jamieson Greer told CNBC<\/a> on Aug. 24, \u201cWe offered them the best access to the United States of any country in the world. \u2026 It certainly doesn\u2019t make economic sense\u2026 but they came in and they wanted more, and we weren\u2019t prepared to do that.\u201d<\/p>\n The same day, Trump wrote<\/a> on Truth Social, \u201cCanada has been ripping off the United States of America for years. Their ridiculously high tariffs on our Farmers and farm products has made life impossible for these great American Patriots, and has long created a 60 Billion Dollar Deficit between our two Countries. Not sustainable, and NOT ANYMORE!\u201d<\/p>\n What products are affected?<\/p>\n The goods subject to the newly imposed tariffs are a modest subset of cross-border trade, representing about $20 billion of the $382 billion in Canadian goods bound for the U.S. <\/p>\n Still, about<\/a> 500<\/a> products<\/a> are affected, including alcoholic beverages, dairy products and flowers. Although some U.S. tariff targets are symbolic \u2014 such as hockey equipment \u2014 others could have a significant economic impact in the U.S., such as plywood, a key component of housing construction. <\/p>\n \u201cThe U.S. does not have enough plywood to meet construction demand, so it will have to continue to source plywood from Canada,\u201d said Ross Burkhart, a Boise State University political scientist who specializes in trade policy. \u201cThis will make construction costs more expensive, and in combination with the higher cost of mortgages, this tariff can potentially have a major impact on housing affordability.\u201d<\/p>\n Collapsed trade talks also mean existing U.S. tariffs on Canadian automobiles, aluminum and steel will remain in place.<\/p>\n Canada is teeing up retaliatory tariffs on U.S. goods, effective Sept. 8. Prime Minister Mark Carney has said the moves will likely affect \u201csteel, dairy, appliances, agricultural equipment, pulp and paper, electronics.\u201d<\/p>\n The tariffs could be challenged in U.S. court. The Trump administration imposed them under Section 338 of the Tariff Act of 1930, an authority that has not been used before, and some legal experts told PolitiFact they think it could be overturned in court. Already, the Supreme Court threw out<\/a> an earlier round of Trump tariffs based on a different law.<\/p>\n Could these new tariffs impact the midterm elections?<\/p>\n Of the eight most competitive U.S. Senate races, six are in states where Canada is the top trading partner: Georgia, Iowa, Maine, Michigan, North Carolina and Ohio. <\/p>\n If there\u2019s any economic fallout in these states \u2014 particularly for small businesses, which are less able to adapt than big companies \u2014 campaigning Democratic candidates are likely to cast blame on the Republican president.<\/p>\n