U.S.-Canada Trade War Escalates; Now Trump Threatens Tariff Hike on Autos

As we reported early Saturday morning, the U.S. implemented 50% tariffs on about 5% of Canada's exports to the U.S – about $20 billion a year of everything from timber to hockey sticks to tongue depressors. .

Canada said the U.S. at the last minute made new demands. U.S. Trade Representative Jamieson Greer said Canada had walked away from the table. Regardless of who was at fault, alcohol beverage producers remain locked out of seven of Canada's nine provinces, and it looks like they will be for a long time.

Prime Minister Carney said Canada will respond with dollar-for-dollar targeted tariff protection for industries exposed to the new U.S. duties, including autos, steel and aluminum, dairy, appliance, agricultural equipment, pulp and paper and electronics sectors.

U.S. Spirits Industry Response

In a statement early Saturday after the collapse of the talks, Distilled Spirits Council of the U.S. President Chris Swonger and Micael Bilello, president. American Whiskey Association, called for an end to this spat and restored access to Canadian consumers for American spirits producers.

Swongeer portrayed Saturday's collapse of trade talks as a result of Canadian provincial refusal to sell U.S. spirits.

In a statement, Michael Bilello, president. American Whiskey Association, said:

“The American Whiskey Association remains committed to a straightforward position: American whiskey producers should have fair access to the Canadian market and the opportunity to compete for space on provincial shelves and reconnect with Canadian consumers.

“We encourage both governments to return to the negotiating table and work toward a stable, predictable resolution that restores fair market access.

"Market access. Shelf access. Consumer access.”

This is a Trade War

Make no mistake: This has grown beyond a "spat." We now have a trade war. Listen to Canadian Prime Minister Mark Carney and Jamieson Greet, the U.S. Trade Representative.

“You’re at war when you get attacked,” he said, Referring back to Trump's earlier suggestion that Canada should become the 51st U.S. state, Carney said Canada won't accept being a "subsidiary" of the U.S.

Trump responded via Truth Social that "Canada will be treated like a State no longer! On Trade, and in other ways, also, they are among the worst Nations in the World to deal with. They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US!"

Vice President JD Vance referred to Canada as a "state" during an answer to a question about the trade dispute. "Sorry, Freudian slip," Vance said before taking aim at Ottawa's trade policies.

In what appears to be a new talking point, Transportation Secretary Sean Duffy said Canada would come back to the table owing to its dependence on the U.S. for security. Vice President JD Vance sounded much the same theme, saying Canada has underinvested in its military because of the shield provided by the U.S.

Trump Escalates War with Yet More Levies

But before Carney could announce new tariffs against U.S. products, Trump escalated the trade war with a post to Truth Social Monday announcing the U.S. will increase tariffs on Canadian automobiles, car parts and steel to 50% effective Jan. 1, 2027.

The U.S. levy on Canadian steel is already 50%, while the tariff on car parts and automobiles is 25%, according to the Canadian government.

Ontario Premier Doug Ford told The Associated Press earlier Monday that he was willing to cut off electricity and critical minerals to the U.S. as the trade war drags on. Ontario sends power to about 1.5 million people in Michigan, New York and Minnesota.

Meanwhile, Trump and Ontario Premier Doug Ford exchanged name-calling, with Trump calling the premier "Flunky Ford," and Ford calling Trump the "king of bankruptcies," a reference to the three casinos Trump put into bankruptcy, one of them twice.

Ford also called on the Canadian federal government to  "step up" with "major support and regulatory change," including:

• Eliminating federal greenhouse gas emissions standards for Canadian-made vehicles.
• Exempting tariff-impacted sectors from federal emissions performance standards.
• Investing significantly in auto, steel, and manufacturing industries.
• Targeting "deep red states" in counter tariff response.