Canada-US Alliance Fractures as Trade War Escalates

A once-strong alliance between Canada and the United States is now under threat due to a trade war. The breakdown in negotiations has led Prime Minister Mark Carney to acknowledge that 'America has changed' and the relationship will not return to its previous state.

Canada has retaliated against US tariffs by targeting sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Canadian goods worth about $20 billion are affected, with a 50% tariff imposed on them by the US.

Royal Bank of Canada economists estimate that the tariffs directly affect about 0.4% of Canada's GDP because they cover only about 5% of Canadian exports to the US. However, the damage could grow if retaliation broadens or more sectors are targeted.