When Prime Minister Mark Carney of Canada gathers his cabinet in Banff, Alberta, on Thursday, two questions are likely to loom over their semiannual retreat: whether the country should keep answering President Trump’s trade retaliation with more tariffs of its own, and how to help the hardest-hit businesses and workers.
On Tuesday, Canada retaliated against 50 percent American tariffs on $20 billion worth of Canadian goods with 15, 25 and 50 percent tariffs, depending on the product. The moves followed the collapse of trade talks last month between the once-close allies and put the countries, Mr. Carney said, “at war.”
Mr. Trump responded that evening by adding more products to his 50 percent tariff list and banning the imports of several Canadian goods outright, including beer, wine and liquor.
Mr. Carney has not spoken publicly since that escalation. Dominic LeBlanc, the minister responsible for trade, said in a statement on social media that the government was “assessing” Mr. Trump’s latest blow to Canada’s economy.
He added: “As has been the case for the last 18 months, our first priority remains on protecting and supporting Canadian workers, farmers, families, and businesses from these unjustified actions.”
Polls released in recent days show unusually widespread support across Canada’s fractious regions for Mr. Carney’s decision to hit back, with many respondents wanting the government to go further — with measures like an export tax on electricity.
But Mr. Carney, a former central banker with a doctorate in economics, has not shown the same enthusiasm for tariffs as Doug Ford, Ontario’s premier. Mr. Carney seemed ambivalent about counter tariffs during the period after Canada’s new tariffs took effect but before Mr. Trump retaliated. “I don’t believe in escalating the conflict, that’s not constructive,” he said in a recorded video address to Canadians.
Since entering politics last year, Mr. Carney has not spoken about counter tariffs the way most economists might. But there is a broad consensus in that profession that Canada’s relatively small economy cannot meaningfully hurt the United States, while retaliatory tariffs raise prices for Canadians. Since Mr. Trump’s return to office, it has been clear that Canadian retaliation only provokes more reprisals from the White House.
None of that will matter at the cabinet table, said Andrew McDougall, an assistant professor of Canadian politics at the University of Toronto.
“Carney is as much a prisoner of public opinion now as he is a leader of it,” Professor McDougall said. “Public opinion right now is so inflamed that anything that looks like a concession or a walk back means that he’s going to get destroyed in the public eye.”
Earlier in the week, Mr. Trump had signaled he would ban entry of a particularly high-value Canadian export: business jets, largely built in Ontario and Quebec by Montreal-based Bombardier.
He settled instead for a smaller target made by a company also controlled by Bombardier’s founding family. Starting Sept. 29, the United States will bar three-wheeled motorcycles made in Quebec by BRP, short for Bombardier Recreational Products, best known for Ski-Doo snowmobiles and, like its sister aerospace company, a symbol of the province’s industrial prowess.
The ban appears to be retaliation for a 50 percent Canadian tariff on American motorcycles that threatens to price Harley-Davidson out of the Canadian market.
Emilie Proulx, a spokeswoman for BRP, said the ban will have limited effect in the near term because the company has already shipped the “vast majority” of motorcycles ordered by American dealers for this season.
The import ban also covers nearly every type of beer, wine and liquor, including alcohol-free beer, a response to eight of Canada’s 10 provinces pulling American products from government liquor stores and distribution systems. Mr. Ford and his British Columbia counterpart, David Eby, have set a high bar for any trade agreement that would let them reverse course.
Also newly banned: various forms of whey, the liquid left over after cheese and yogurt making, now in high demand for protein supplements.
Mr. Trump has long made exaggerated and misleading claims about Canada’s restrictions on American dairy imports.
Aluminum products were added to the 50 percent tariff list, along with furniture, motorboats longer than 7.5 meters, several paper products, mattresses and golf carts — expanding on the steel, aluminum and auto tariffs imposed last year that helped sink the trade talks.
The White House did lift tariffs on some goods, including tissue used for toilet paper and facial tissue, paper bedsheets, road salt, lead, “chemically pure sugars,” some electrical equipment and fishing rods.
Wendong Zhang, a professor of economics at Cornell University, said his model that tracks the effects of the tariffs launched during the trade war confirms that Canada’s retaliation causes more economic harm than restraint would — but that Ottawa has chosen its targets carefully. Butter, the largest U.S. dairy export to Canada, is absent.
Professor Zhang added that the effects of tariffs can linger long after they’re lifted. Saskatchewan and Alberta briefly banned American liquor early in the trade war, and sales remain down by more than 60 percent since the products were returned to shelves.
Still, Professor Zhang expects Mr. Carney to announce further retaliation.
“I understand that it’s politically suicidal to not have a reaction,” he said.
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