The mainstream media has treated the collapse of trade talks with Canada as a symmetrical crisis, with each side blaming the other for a needless trade war. The Wall Street Journal’s story is headlined “U.S., Canada Spiral Toward Trade War.” The New York Times piece reported that “Trade talks between the countries suddenly soured late Friday night, following a week of talks in which negotiators appeared hopeful for an agreement.”
This framing is horse pucky. What these and other accounts leave out is the fact that all of Trump’s gratuitously imposed tariffs were illegal to begin with, as violations of the U.S.-Mexico-Canada free-trade agreement. The accounts also omit why Trump unilaterally went after Canada in the first place in August 2025.
His preposterous rationale was that Canada was a source of fentanyl entering the U.S. But Customs and Border Protection reported that less than one-tenth of 1 percent of fentanyl entering the U.S. comes from Canada.
According to U.S. Trade Representative Jamieson Greer, in the deal that fell apart, the U.S. was prepared to reduce tariffs that Trump imposed last year on aluminum, steel, autos, and lumber, in exchange for several Canadian concessions. But at the last minute, the Canadians balked. That’s the story anyway.
To drill down into the specifics, in exchange for Trump agreeing to reduce tariffs that were wrongly levied to begin with, the Canadians were supposed to make various concessions. But at the eleventh hour, the U.S. side added new demands, including limits on Canada’s protection of the French language in labeling requirements. According to Prime Minister Mark Carney, the Trump team also refused to ease tariffs on heavy- and medium-duty trucks, including those made at Ford’s plant in Ontario.
Carney, correctly feeling that the U.S. was not negotiating in good faith, pulled the plug.
What now?
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Though the U.S. is by far the bigger economy, key domestic industries are feeling the pain, creating price hikes that add to inflationary pressures in an election year. U.S. automakers, facing shortages of aluminum and steel, will now pay more for imported metals from Canada. According to The Wall Street Journal, prices for steel and aluminum mill products have surged 22.5 percent and 40.5 percent, respectively, over the past year. General Motors projected a $2.5 billion to $3.5 billion added expense this year from tariffs. Home builders, with shortages of plywood, will face higher prices on Canadian lumber and wood products, particularly the type of wood used in framing houses.
In retaliation for the Canadians’ refusal to meet U.S. demands, the U.S. imposed new 50 percent tariffs on an absurd array of some 500 goods, including fake mustaches and dog leashes. They add up to only 5 percent of Canadian exports to the U.S.
Prime Minister Carney said Saturday that he would offset the impact of the new tariffs on Canada with a domestic aid package and dollar-for-dollar tariffs on the U.S. that would remain in place throughout the rest of Trump’s term if need be. Trump blustered that he’d extend the 50 percent tariff to Canadian-made cars, a real threat to the domestic auto industry. (The U.S. and Canada exchange so many auto components across the border that the border functionally doesn’t exist; if you tariff Canadian cars, you are effectively taxing the U.S. auto industry as well.)
Like Iran, Canada demonstrates the strength of the weak when the weak have a coherent strategy and the strong proceed from ignorance and petulance.
Prediction: In a month or two, after more Trump insults and threats to annex Canada, trade talks will resume. The administration will agree to a deal not as good as the one they could have had last week. Trump will declare victory. Sounds a lot like Iran.
