Canada-US Trade Ties Reach Breaking Point

A long-standing trade relationship between Canada and the US has reached a breaking point. After failed negotiations, Canadian Prime Minister Mark Carney acknowledged that 'America has changed' and stated that the two countries will no longer return to their old relationship.

The US imposed 50% tariffs on about $20 billion worth of Canadian goods early Saturday, prompting Canada to retaliate dollar for dollar beginning September 8. The targeted sectors include steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

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.