The United States and Canada鈥檚 trading relationship has come under threat as President Donald Trump announced an abrupt stop to talks with Ottawa, freezing months of negotiations that cover key sectors like automotives and aluminum.
The stakes are high as Trump鈥檚 tariffs have already dragged on Canada鈥檚 growth鈥攚ith its economy contracting in the second quarter.
Here鈥檚 what we know about soaring tensions between the United States and its second-biggest goods trading partner:
Canada, a major supplier of steel and aluminum for US businesses, has been sharply hit by Trump鈥檚 sector-specific tariffs this year.
Both sides have been locked in intensive negotiations to ease these duties, and Trump held cordial talks with Canadian prime minister Mark Carney in recent weeks.
The tariffs include 50-per cent levies on US imports of steel and aluminum, alongside a 25-per cent duty on automobiles鈥攁lthough with partial relief.
This month, Trump further pressured the US鈥檚 top supplier of lumber by imposing an additional 10-percent duty on such imports.
Canada in turn maintains counter tariffs on steel, aluminum and autos.
Multiple Canadian provinces earlier restricted the sale of US alcohol as well, in a significant hit to US producers.
Overall US-Canada trade was worth more than $900 billion in 2024, US government data shows.
Canada also faces a broad 35-percent US tariff. But a swath of exemptions for products entering under the US-Mexico-Canada trade agreement (USMCA) has softened the overall blow.
A Royal Bank of Canada analysis found that as of July, 88 percent of US imports from Canada were duty-free, covering most Canadian exports.
Among significantly tariffed products, however, exports to the United States dropped by $5.9 billion鈥攐r 10 percent鈥攆rom a year prior in the January to July period, the report said.
Canadian exports of steel and aluminum products to the United States were hit especially hard, falling by 40 percent in July, the month after Washington doubled tariffs on both metals.
Auto and parts exports, meanwhile, dipped by seven percent for the same period.
Carney has so far tried to balance a firm response to Washington with moves that address US concerns.
In June, Canada said it would rescind its digital services tax鈥攚hich would have hit US tech giants鈥攁fter Trump similarly said he was ending trade talks with the country.
But Carney said this month that US policy shifts, including tariffs now at levels last seen in the Great Depression, mean that Canada too must drastically change its economic strategy.
This process 鈥渨ill take some sacrifices and some time.鈥�
Carney said Friday that Canada was ready for further trade talks whenever the United States is ready, and that bilateral talks had shown 鈥減rogress.鈥�
