Prime Minister Mark Carney says Canada will deepen economic ties with “trusted partners” while imposing retaliatory tariffs to protect Canadian industries.
Canada is accelerating efforts to diversify its trade relationships beyond the United States as President Donald Trump’s latest tariffs deepen economic tensions between the two neighboring countries, Prime Minister Mark Carney said on Tuesday.
Carney said Canada would not escalate the trade dispute with Washington but insisted retaliatory tariffs were necessary to protect Canadian workers, businesses and communities after the United States imposed new duties on Canadian exports under Section 338 of U.S. trade law.
“I don’t believe in escalating the conflict, that’s not constructive,” Carney said in a video message. “But our tariffs are necessary to protect our workers, protect our companies and our communities. We can’t let American goods into Canada tariff-free while they charge our companies to export.”
The dispute marks one of the sharpest breaks in decades of economic cooperation between the two countries, whose economies have long been among the world’s most integrated through North American trade agreements.
Canada shifts toward “trusted partners”
Carney said Canada has spent the past year and a half reducing its dependence on the U.S. market and strengthening trade and investment ties with other reliable international partners.
“It was easy business, but it meant we relied too much on one economic partner,” he said. “That time is over.”
His comments signal a broader shift in Canada’s trade strategy as Ottawa seeks to expand commercial ties with Europe, the Indo-Pacific region and other allied economies while reducing vulnerability to U.S. policy changes.
Retaliatory tariffs target U.S. goods
Canada’s retaliatory measures took effect shortly after midnight Tuesday, increasing tariffs on several U.S. steel products to 50 percent from 25 percent. Ottawa also imposed new import duties on a range of American consumer goods, including motorcycles, cosmetics, cheese and other products.
The measures were introduced in response to Washington’s Section 338 tariffs, which apply to approximately $20 billion worth of Canadian goods, including products that previously qualified for preferential treatment under the North American trade framework.
Canadian officials say the tariffs are designed to counter U.S. trade measures while encouraging domestic production and protecting industries affected by the dispute.
Economic impact expected across Canada
Carney warned that the U.S. tariffs would have uneven effects across Canada, particularly in provinces with strong manufacturing and export sectors.
“The harsh reality is that these tariffs will hurt some Canadians more than others — by design,” he said.
Ontario, Quebec and British Columbia are expected to face the greatest economic pressure because of their large industrial bases and their decisions to remove U.S. alcohol from government-run liquor stores as part of Canada’s response.
Economic analysts estimate the U.S. tariffs place about 0.8 percent of Canada’s GDP at immediate risk and could reduce long-term economic output relative to pre-tariff projections.
Calls to support Canadian businesses
Carney urged Canadians to support domestic businesses as the country adapts to the new trade environment. “This won’t be easy, and I won’t pretend otherwise,” he said. “But Canadians have faced difficult stretches before.”
He encouraged consumers to buy Canadian-made products and travel within the country, describing those choices as the most powerful response to the ongoing trade conflict.
The renewed tariff dispute has raised concerns about supply chains, manufacturing costs and broader North American trade relations, with both governments maintaining tariffs while leaving the door open to future negotiations.
