Prime Minister Mark Carney said Canada will apply counter-tariffs on $20 billion of U.S. products on Sept. 8, escalating the feud rocking one of the world’s biggest trading relationships.

“We take this step reluctantly,” Carney said Saturday, acknowledging it will raise costs and reduce choice for Canadians, hit innocent U.S. companies, and make it harder for the two countries to work together.

Carney said he was left with little choice after trade talks with President Donald Trump’s administration broke down on Friday night, and the U.S. put import taxes of 50% on items such as plywood, liquor, electrical equipment and hockey gear from Canada.

“You’re at war when you get attacked,” Carney told reporters in Ottawa. “We got attacked.”

Opting for retaliation cements Canada as one of just two countries to fight fire with fire in the face of U.S. tariffs. The other is China. As Trump imposes the new levies with a never-before-used clause of a 1930 law, Canada’s resistance, and how the U.S. deals with it, will be closely watched.

Carney’s risky move is a reminder of how he suddenly came to power last year: stridently campaigning to lead a fightback against Trump, who started his second term saying he wanted to make Canada a 51st state with “economic force.”

Two-time former central banker Carney has in reality spent much of his time in office until now trying a conciliatory approach with the U.S., while diversifying Canada’s economy. He rolled back retaliatory tariffs applied by his predecessor Justin Trudeau, axed a digital services tax that irked Trump, and recut a deal in the U.S.’s favor to open a bridge connecting Detroit to Windsor, Ontario.

That tactic didn’t help get a deal. On Saturday Trump used a Depression-era authority known as Section 338 to impose the tariffs on Canadian goods totaling about $20 billion in annual U.S. imports.

Now Carney has returned to what Trudeau did in March 2025: Big counterduties, meant to match Trump’s in dollar terms. The Canadian levies will apply to U.S. steel, dairy, appliances, agricultural equipment, electronics, pulp and paper, with more detail to be published in the coming days, the prime minister said.

By punching back, Carney is taking an economic and political gamble, balancing short-term pain with longer-term strategy. U.S. officials indicated Friday that if Canada retaliated, they have options to escalate — raising the possibility of a spiraling trade war between two countries that exchanged almost $900 billion of goods and services last year.

Carney said talks fell apart for a number of reasons. One involved Trump’s auto tariffs, which are set at 25% on the non-U.S. content in a Canadian-made vehicle. The negotiating teams discussed lowering that to 15%, but the U.S. didn’t want to extend that tariff relief to medium to heavy-duty trucks. such as the kind currently going into production at Ford Motor Co.’s factory in suburban Toronto.

The U.S. also sought to put limits on Canada’s trade deals with other countries and made demands on cultural and French-language issues that were unacceptable, Carney said.

He added the tension isn’t good news for talks around the U.S.-Mexico-Canada Agreement, which entered into rolling reviews after Trump declined to renew it in July.

‘Written in pencil’

After months of appearing reluctant to talk about the delicate, high-wire U.S. negotiations, Carney pivoted on Saturday and revived the tone he deployed at his widely-watched January speech to the World Economic Forum in Davos, urging midsized nations to collaborate and resist coercion by superpowers, which prompted admonition by Trump at the time.

On Saturday, Carney slammed the U.S. for violating the USMCA trade deal with tariffs over the past 18 months and accused the White House of continuously changing its justifications for trade measures, including fentanyl trafficking, Canada’s dairy policy, a television commercial that Trump didn’t like, wildfire smoke and a trade deficit.

“Our government understood before many that America would transform all of its commercial relationships, that it would put a series of tariffs on its closest allies and use economic integration as a weapon,” the prime minister said. “We recognized that sometimes its signature was written in pencil.”

The U.S. is Canada’s largest export market by far, with oil, vehicles and car parts among the largest categories. The U.S. trade deficit with Canada is driven by huge imports of crude, primarily from Alberta.

“Canada fuels American growth: supplying 99% of their natural gas imports, 85% of electricity imports and 60% of crude oil imports,” Carney said in his prepared remarks. “I don’t think they want us to stop sending it.”

Canada is also the largest buyer of U.S. goods and services aside from the European Union, according to data from the U.S. Commerce Department.

The premier of Canada’s most populous province Ontario, Doug Ford came out after days of silence and backed Carney on dollar-for-dollar retaliation. In a letter to the prime minister earlier this week but only published Saturday, he highlighted Canada’s energy and critical mineral assets as points of negotiating leverage, and he also suggested additional tariffs on products from “politically significant” states for Trump, such as Florida, Texas, Iowa and Wisconsin.

“Products from these states should face the full force of Canada’s response,” said the letter by Ford, who has previously clashed with Trump over attempts to tax U.S. purchases of Ontario’s electricity, and running anti-tariff ads south of the border.

Surveys suggest Carney has broad public support for pushing back against aggressive U.S. trade tactics. A poll of Canadians published this week by Leger Marketing found 56% wanted the government to “take a hard line and make no more concessions.”

The same poll found support for measures such as export taxes on energy the U.S. buys from Canada and special taxes on U.S. services such as Netflix.

Jason Kenney, a former Alberta premier and a political rival of Carney’s Liberal Party, praised the prime minister for walking away from the negotiations.

“Canada clearly made a serious, good faith effort to get greater stability and market access, and remains ready to find a fair, balanced agreement,” Kenney said in a social media post. “But we are not cravenly surrendering in the face of constant economic and political aggression.”

Many Canadians are likely to continue retaliating in their own way — with some encouragement from elected politicians — by spurning trips south and boycotting U.S. products. Canadian travel to the U.S. has fallen sharply since Trump returned to the White House, hurting border states and tourist destinations such as Las Vegas.

Asked if part of his calculation in hitting back was based on polling numbers and the U.S. bond market, which has seen yields spiking, Carney said it wasn’t. But he added: “Markets sometimes ignore these fundamentals, and then all of a sudden they focus on them.”

———

(With assistance from Nojoud Al Mallees and Melissa Shin.)

©2026 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.