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Canadian Prime Minister Mark Carney is enjoying strong public support after suspending trade negotiations with the United States and retaliating against President Donald Trump’s tariffs. However, economists warn that worsening job losses, inflation and factory closures could eventually weaken Canadians’ willingness to sustain the trade fight.
Carney’s government announced dollar-for-dollar counter-tariffs on $20 billion of U.S. goods on Tuesday, alongside C$7.5 billion ($5.41 billion) in economic support measures. Canada has taken a tougher approach than many U.S. trading partners despite sending roughly 70% of its exports to American buyers.
An Angus Reid poll showed 76% of Canadians supported Carney’s decision to halt trade talks, although 40% expressed concern that their jobs could be at risk.
Julian Karaguesian, a former Canadian Finance Ministry adviser and McGill University economics professor, warned that Carney’s negotiating leverage could decline if the trade war leads to higher unemployment, declining incomes and factory shutdowns. The U.S. economy is approximately 13 times larger than Canada’s.
The latest tensions followed last-minute U.S. changes to a tentative Canada-U.S. trade agreement. Carney said Washington sought adjustments involving auto tariffs, French-language requirements and Canada’s ability to negotiate trade deals with other countries.
Canada’s economy has so far absorbed U.S. tariffs on steel, aluminum, autos and lumber, while many exports previously remained protected under the U.S.-Mexico-Canada Agreement. Unemployment fell to a two-year low of 6.4% in July, and economists expect second-quarter economic growth data to show a strong rebound.
Still, University of Calgary economist Trevor Tombe estimates Trump’s latest tariffs, affecting about 5% of Canadian exports, could eventually cost 90,000 jobs. Canada’s central bank has also warned that a U.S. withdrawal from USMCA could push the Canadian economy into recession.
Carney could face further political pressure if Republicans retain congressional power in the November midterm elections. Even with continued public anger toward Trump, rising food prices, housing costs and unemployment could eventually increase demands for Canada to negotiate a new trade deal with Washington.
