US-Canada trade rift deepens as White House mulls fresh tariffs

Carney has characterised the U.S. tariffs as a "miscalculation," arguing the measures were designed to divide Canadians rather than resolve underlying trade issues, and pointed to Canadian resolve in response, including public calls to buy Canadian products. The Canadian government had earlier this year removed a number of retaliatory tariffs on U.S. goods compliant with the Canada-United States-Mexico Agreement, a gesture toward de-escalation that has since been reversed following the breakdown in talks, Carney said.

The White House official said President Donald Trump retains a range of tools that could be used to bring the dispute to a resolution should bilateral negotiations fail to restart before Canada's September tariffs take effect.

Canada remains one of the largest U.S. trading partners, so further tariff action carries meaningful cross-border supply chain implications, particularly for steel, aluminium, autos and agricultural sectors already caught up in the current dispute. The dollar and broader risk sentiment are unlikely to move sharply on early-stage White House commentary alone, but a further escalation once Canada's own retaliatory tariffs take effect in September would raise the stakes considerably, particularly for sectors with tightly integrated cross-border supply chains, said analysts tracking the dispute.

The exchange marks one of the more serious breakdowns in U.S.-Canada trade relations in recent memory, with both sides now committed to tariff measures covering a wide swath of cross-border trade in the absence of a negotiated settlement. Markets and industry groups on both sides of the border are likely to watch closely for signs of whether the two countries return to the negotiating table before the September deadline, or whether the current escalation cycle continues to build.