Carney Rejects U.S. Trade Terms, Promises Dollar-for-Dollar Retaliation

The morning after withdrawing negotiators from Washington talks and triggering a fresh round of American tariffs, Prime Minister Mark Carney explained his decision to Canadians on Saturday, characterizing the U.S. proposal as fundamentally flawed.

“We recognized from the outset that America has changed,” Carney stated. “We recognize that sometimes, its signature is written in pencil.”

“We cannot accept what they offered, and we will not concede what they demanded,” he added. “We were not prepared to compromise Canada’s sovereignty or undermine our key industries.”

“You’re at war when you’re attacked, and we got attacked,” he later remarked.

The latest U.S. tariffs, Carney said, “are designed to hurt and divide us. They are a miscalculation because Canadians will always take care of each other. We know we’re stronger together.”

On Friday night, Carney attributed the collapse of negotiations to unspecified last-minute demands he called “unfair, uneconomic, and [calling] into question the reliability of any deal.” Minutes later, the United States implemented previously announced 50 percent tariffs on $20 billion worth of Canadian exports.

Carney immediately pledged that Canada would retaliate “dollar for dollar.”

On Saturday, he elaborated that American negotiators “asked too much and offered too little.”

The decision to confront President Trump and abandon the negotiating table marks the latest rupture in a once-close bilateral relationship. Ties have deteriorated sharply since Trump’s return to office, marked by tariff offensives, personal insults directed at Canadian leaders, and repeated suggestions that Canada be annexed as the 51st state.

Trump’s trade actions have ignited widespread anger and anxiety among Canadians.

Negotiations began in late July in an effort to avert new tariffs and roll back or reduce existing U.S. duties of up to 50 percent on the critical auto, steel, and aluminum sectors imposed last year.

As he did Friday, Carney signaled that Canada will now intensify its strategy of disengaging from the U.S. economy, pursuing trade diversification and expanding commercial ties with other nations.

“Last spring, I warned that America is trying to break us so that they can own us, and I promised: ‘That will never, ever happen,'” Carney said. “We are keeping that promise. Canada is becoming stronger and less dependent on America.”

Unlike previous tariffs, the new U.S. measures target a broader range of sectors, though they disproportionately hit building materials such as plywood and tissue—significant exports for the forestry industry—as well as Canadian alcohol.

The new tariffs cover only a small fraction of the $382 billion in goods the United States imported from Canada last year, notably exempting oil, gas, electricity, and potash, a key fertilizer not mined in significant quantities domestically.

However, many affected products—including men’s suits and honey—are often produced by small businesses unlikely to withstand a substantial loss of market access.

Carney promised 25 billion Canadian dollars in financial assistance to impacted companies.

The precise mechanics of Canada’s retaliation—and how to avoid inflicting collateral damage on Canadian businesses—remain unclear. Many Canadian manufacturers depend on U.S. supplies and materials that cannot be readily or economically sourced elsewhere. Canada’s smaller economic footprint also limits its capacity to inflict meaningful economic pain on the United States.

Carney acknowledged that Canada is moving ahead with retaliation “reluctantly, because we recognize that it will raise costs and reduce choice for Canadians. Reluctantly, because we recognize that some U.S. companies and states are innocent bystanders in a dispute they did not want.”

He added: “We take this step confident that it is in the best interests of Canada and that by rejecting a bad deal, by standing up for Canada and by focusing on what we can control, we will build Canada strong for all.”

Doug Ford, premier of Ontario, Canada’s most populous province, urged Carney this week to consider leveraging oil, gas, and electricity exports as trade weapons. Carney had previously downplayed that option, citing risks to Canada’s reputation for reliability, though polls indicate broad public support for energy export taxes.

On Saturday, after outlining U.S. energy dependence on Canada, Carney added: “I don’t think they want us to stop sending it.”

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