Carney vows Canada will do whatever it takes in U.S. trade war

Mark Carney said Canada would do "whatever it takes" in a trade war with the United States after Donald Trump imposed new 50% tariffs on Canadian products, escalating a fight that could hit about C$28 billion in annual Canadian exports to the U.S. Carney made the remark after speaking with Trump and agreeing to intensify negotiations in the coming weeks.

The economic shock is already visible in the numbers. An Illinois Economic Policy Institute report released July 22 said the U.S. effective tariff rate had risen from 3% to about 10% after this year's tariff hikes, and that at least 90% of tariff costs are passed on to U.S. consumers. That pass-through matters because tariffs do not stay in customs offices; they show up in production costs, shipping bills and retail prices, especially if Ottawa responds with more countermeasures and keeps pressure on U.S. exporters.

The first U.S. pain would likely land in Michigan and the broader Midwest, where auto manufacturing depends on tightly linked cross-border supply chains. Energy and agriculture are also exposed, and the Trump administration said the new levies were meant to push back against Canadian retaliation and "discriminatory" policies. Most provincial premiers have already pledged to keep U.S. alcohol bans in place, adding another layer of retaliation that would squeeze U.S. producers selling into Canada.

Carney has said the U.S. tariff move violates CUSMA, the Canada-U.S.-Mexico trade pact. The dispute widened after the U.S. declined on July 1 to extend the North American trade deal, starting a decade-long countdown to its possible end while seeking changes. Carney and the premiers met in Charlottetown, Prince Edward Island, to hear the tariff battle plan, a sign that Ottawa is treating the confrontation as an all-government economic fight rather than a short-lived policy spat.

For U.S. businesses, the risk is not limited to factories at the border. Companies can delay investment, rethink inventories and adjust prices if they expect tariffs and retaliation to linger, and households on both sides of the border can end up paying more for imported goods. If the standoff deepens, the damage will spread from auto parts and alcohol to slower spending, higher costs and a more fragmented North American market.