New Canadian tariffs targeting roughly $20 billion in U.S. imports snapped into place on Tuesday, prompting President Trump to retaliate hours later by trying to limit the federal government’s ability to buy Canadian goods.
The president’s move, conveyed in a social media post, escalated a widening trade war between the two longtime allies, a conflict that may yet unleash serious financial blowback for consumers and businesses on both sides of the border.
The latest front began after midnight, when Canada began enforcing tariffs up to 50 percent on a variety of U.S. goods, including clothing, cheese, metal parts and wood products. The approach was meant to mimic the taxes that Mr. Trump imposed on Canada last month, after trade talks between the two neighbors collapsed in acrimony.
In response, Mr. Trump said Tuesday that he had directed his administration to take steps to “REMOVE Canadian-origin products” from a key government procurement system that guides federal purchasing.
Mr. Trump said he was acting reciprocally, claiming that Canada had “banned American Small Businesses and Companies from selling into their Government Procurement Markets.” He said the policy would remain in place “unless Canada restores full and fair reciprocity for American Farmers and Companies.”
The White House did not immediately comment on Mr. Trump’s plan.
For now, the economic effects of the tit-for-tat may be limited because it implicates only a small portion of the annual trade between the United States and Canada. The more pressing concern is a potential cycle of retaliation, one that results in even higher and more exhaustive duties that drive apart the two intertwined economies.
In Canada, Prime Minister Mark Carney has sought to position himself as a bulwark against Mr. Trump’s trade aggression, describing his nation as “at war.” Canadian officials generally have pledged to respond “dollar for dollar” to any U.S. duties.
In Washington, the president and his aides have repeatedly mocked their Canadian counterparts and the size of their ally’s economy and military. Mr. Trump has matched the tough talk with a threat to impose duties on Canada’s auto industry while promising to block Bombardier, a plane manufacturer, from selling in the United States.
The president has also called on Americans to halt their purchases of some Canadian goods and mused last week about cutting off bilateral trade outright.
“BUY AMERICAN. FLY ON AMERICAN AIRLINERS. ENJOY AMERICAN LIQUOR AND BEVERAGES. SAIL ON LAKE AMERICA,” Mr. Trump posted previously to social media.
The spat with Canada offered the latest evidence that Mr. Trump remains as committed as ever to his disruptive strategy of trade brinkmanship. Despite nearly two years of blistering court defeats, vicious international disputes and mounting domestic blowback, tariffs remain the president’s preferred tool to try to boost domestic manufacturing and broker better trade deals.
“This tit-for-tat retaliation is bad for Canadian businesses and consumers, and bad for American businesses and consumers,” said Brad Wood, the senior director for trade and innovation at the National Foreign Trade Council, a policy advocacy group whose board of directors includes Caterpillar, Exxon Mobil, Ford Motor and Walmart.
“Every escalation is one more layer of barriers that ultimately Canada and the United States need to resolve,” Mr. Wood added. The question now, he said, is whether Mr. Trump intends to follow through with his threats.
While he spars with Canada, Mr. Trump and his aides are also putting the final touches on a roster of new tariffs targeting dozens of additional countries that the administration has accused of engaging in unfair trade practices. The latest round is expected to find that other nations overproduced certain products — what the administration has called “excess capacity” — leading to large and persistent U.S. trade deficits with those nations.
Those taxes, which could arrive as soon as this week, are meant to replace some of the duties that the Supreme Court struck down in February.
Further inflaming tensions, Mr. Trump has even threatened to block all trade involving countries that export more to the United States than they import from it. Currently, the United States has a yawning trade deficit in goods and services involving dozens of trading partners, including many in Europe and Asia. A halt to imports could prove economically cataclysmic.
Each of those actions could create new financial pressures on American families and businesses. Tariffs are taxes on imports, meaning products from abroad can become more expensive. To that end, the president’s global trade war has only exacerbated policymakers’ yearslong fight with inflation, with the next report on consumer prices set to arrive this week.
The trade dispute between the United States and Canada exploded into public view in July after Mr. Trump accused Canada of discriminating against U.S. industries. In response, he promised to impose tariffs of 50 percent on select Canadian goods unless the two sides could reach some sort of deal in 30 days.
Talks had proceeded for months, and at various points in August, Mr. Trump seemed confident that a resolution was within reach. But negotiations collapsed before his deadline, prompting both sides to blame each other for scuttling the negotiations with unreasonable, last-minute demands.
As a result, Washington imposed duties in August on hundreds of Canadian imports, including wine, cheese, clothing and hockey sticks. Mr. Carney and other Canadians immediately promised to retaliate with their own tariffs on similar products after Labor Day.
In announcing his retaliation on Tuesday, Mr. Trump offered a litany of grievances about Canada’s trade practices. He specifically accused Canada and its provinces of having “banned American Small Businesses and Companies from selling into their Government Procurement Markets.”
Certain Canadian provinces, most notably Ontario, have banned provincial agencies from procuring goods or services from U.S. firms. Ontario, for example, withdrew last year from a contract with Starlink, the satellite company tied to Elon Musk.
The federal government of Canada has not put such a policy in place. But it has issued a request to all government-linked agencies to prefer Canadian goods and services for their contracts. That policy, known as “Buy Canadian,” was a sore point during trade talks last month: Officials from both countries said the United States had asked Canada to cancel the program preferring Canadian goods sooner than planned.
Matina Stevis-Gridneff contributed reporting from Toronto.
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