Canada Sees Long Trade War With US

Summary

Bloomberg's Jon Herskovitz reports that Canada-US trade talks have collapsed and Canada sees little hope of resuming them before the US midterms. The immediate dispute covers medium- and heavy-duty trucks and about $20 billion in trade, while the US has placed a 50% tax on hundreds of Canadian goods. Canadian public support for Prime Minister Mark Carney's tough stance is strong, but Canada's smaller, US-dependent economy is preparing for a prolonged trade war.

• Canada-US trade negotiations broke down amid distrust, with no single issue causing the collapse.
• The US imposed a 50% tax on hundreds of Canadian imports including furniture, plastics, plywood and electrical equipment.
• The headline dispute centers on medium and heavy duty trucks, with about $20 billion in dollar-for-dollar matching trade.
• Canada disliked details involving trade restrictions and erosion of French-language protections.
• Canadian public support for Carney's confrontational stance remains strong despite economic vulnerabilities.
• Overall US-Canada trade is about $900 billion a year, so the immediate dispute may have limited macro impact.
• Michigan and Ohio midterm races and integrated truck supply chains could become leverage in the dispute.