Trade Tensions Escalate: Trump Terminates All U.S.-Canada Trade Negotiations

President Trump has officially terminated all trade negotiations and deals with Canada, following a controversy over a Canadian advertisement featuring former President Ronald Reagan criticizing tariffs. This unprecedented move marks a major escalation in economic tensions between the U.S. and its second-largest trading partner, with immediate impacts on tariffs, exports, and business outlook for both nations.

Economic Impact: Data and Analysis

The decision intensifies the ongoing trade war, disrupting supply chains and destabilizing cross-border investment. Canadian industries most affected include autos, steel, aluminum, lumber, and machinery, with major declines already observed in exports after the rate hike. Canadian Prime Minister Mark Carney responded by threatening to double exports to countries outside the U.S. and by introducing retaliatory tariffs.

U.S -Canada Trade Data Table

Industry Reaction and Future Outlook

Canadian exporters have witnessed a sharp decline in sectoral shipments, especially aluminum, where exports fell by over 24% in monthly averages after new U.S. tariffs took effect. Both countries are expected to accelerate retaliation, potentially affecting supply chain resilience and raising consumer prices in North America.

Prime Minister Carney emphasized the need for Canada to diversify beyond reliance on U.S. markets, warning of job losses, reduced investment, and deep uncertainty for Canadian businesses. The Trump administration, meanwhile, insists that strict tariffs are essential for U.S. national security and domestic manufacturing.

U.S.-Canada Major Trade Sectors (2024)

Conclusion

The termination of all trade deals and negotiations between the U.S. and Canada is a turning point in North American economic policy. With tariffs at historic highs and no diplomatic breakthrough in sight, both countries face mounting uncertainty and the threat of lasting damage to business, investment, and consumer welfare.

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