US-Canada trade war escalates: Trump bans Canadian dairy, alcohol and motorcycles

The United States is banning dairy products, most alcoholic beverages and motorcycles from Canada, the White House said on Tuesday, as the trade war between the two nations escalates.

The ban will take effect in three weeks and comes after Canada imposed retaliatory tariffs on USD 20 billion in US imports earlier Tuesday.

US President Donald Trump on Tuesday moved to shut Canadian products out of large, long-term US government contracts as Canada's retaliatory tariffs took effect and Prime Minister Mark Carney vowed to speed efforts to reduce the country's dependence on the United States.

Trump directed the US General Services Administration to declare Canadian products ineligible for those contracts until Canada allows “full and fair reciprocity” for American products.

Earlier on Tuesday, Carney said Canada's strategy was about becoming more independent. “It's about ensuring that no country can hold us hostage. And that we can live how we want to live.”

Canada is exploring ties with the European Union that could stop just short of membership, a Canadian official familiar with the discussions said.

Options could include expanding existing agreements, negotiating a new treaty or creating other forms of cooperation. The official said Canada is already consulting provinces, territories and labor groups about what a deeper relationship with the EU could look like, but no model has been chosen.

The official spoke on condition of anonymity because they were not authorized to discuss the talks publicly.

Carney is due in Strasbourg, France, next week, where he will attend European Commission President Ursula von der Leyen's State of the European Union address Sept. 16 and address the European Parliament the following day.

The rupture has upended one of the world's closest relationships. The countries have deeply integrated economies and close defense and security ties, but Trump has imposed a series of tariffs on Canadian goods despite negotiating and repeatedly praising the North American trade agreement during his first term. Many of those tariffs violate the pact.

 

Canada looks beyond US

Carney acknowledged the trade actions would cause short-term pain but said they would push Canada to move faster on investment, infrastructure and trade diversification.

“It was easy business, but it meant we relied too much on one economic partner,” he said. “That time is over.”

More than 70 per cent of Canadian exports still go to the United States, underscoring the scale of Carney's push to diversify trade. He said Canada's exports to other countries are rising sharply and are on track to double over the next decade.

 

Canada retaliates as Trump responds

Carney defended the retaliation, saying Canada could not let American goods enter tariff-free while Canadian companies face US tariffs.

Canada was not seeking to escalate the confrontation, he said, but the tariffs were necessary to protect Canadian workers.

Carney said the larger problem was what Washington had sought in the failed negotiations.

“The most fundamental issue is that the cumulative US demands revealed that they wanted us to become even more reliant on them, not less,” he said. “In too many areas, they wanted dependency, not a true economic partnership.”

The prime minister said Washington sought limits on French-language and cultural protections, influence over future trade deals and terms that would weaken the auto, steel and forestry sectors.

How the trade war ends could carry consequences far beyond Canada, testing whether a smaller US ally can resist Trump's economic pressure without being forced to yield.

Earlier on Tuesday, a Canadian official said Ottawa did not intend to change course regardless of whether Trump responded with nothing or what the official called a “nuclear response.” The government's strategy will remain focused on building more at home and diversifying trade abroad, the official said.

The tariffs hit hundreds of American products, including steel, aluminum, cheese, appliances, clothing, cosmetics and farm equipment, at rates of 15 per cent, 25 per cent or 50 per cent. They cover about USD 20 billion in American goods, roughly 6 per cent of the USD 333.6 billion the United States exported to Canada last year.

Since Canada-US trade talks collapsed August 21, Trump and his administration have imposed additional tariffs and issued a series of threats and attacks portraying Canada as weak and dependent.

Trump's trade war and repeated talk of making Canada the 51st state have fueled anger across the country. Canadians have sharply cut travel to the United States and boycotted US goods, moves Carney praised as signs of national resolve.

British Columbia Premier David Eby said the province will install new signs at US border crossings reading: “Welcome to British Columbia, Canada. Strong, proud and will NEVER be the 51st state. Sorry!”

“While our kindness is one of our greatest strengths, you should never, ever mistake that kindness for weakness,” Eby said.