Canada Walks the Tightrope in Escalating Trade War with the US

The US-Canada trade war has escalated rapidly since President Donald Trump returned to office last year. The conflict has ruptured what was once one of the world's closest economic partnerships, with Canada's Prime Minister Mark Carney facing a tough decision.

According to Drew Fagan, an expert on Canada-US economic relations at the University of Toronto, Carney had no choice but to turn down Trump's trade deal offer last month. 'It was a terrible offer,' Fagan said. The US economy is roughly 13 times larger than Canada's $31 trillion economy, raising questions about the limits of Carney's defiance.

The Canadian economy could endure with tolerable amounts of pain if Carney sticks with targeted retaliation, experts say. However, broad-based retaliation against the United States carries huge risks. Wendong Zhang, professor of applied economics and policy at Cornell University, noted that 'Canada is the economy with the most to lose in every scenario.'

Carney's top priority is reducing Canada's economic reliance on the US, which accounts for roughly 75 percent of all Canadian exports. He has backed plans for a new pipeline to the Pacific coast and is targeting closer overseas partnerships, particularly with the European Union.