The Current - U.S. hits back at Canada’s retaliatory tariffs

Episode Date: September 9, 2026

The White House responded to Canada's retaliatory counter-tariffs with a series of proclamations. We speak with two U.S.-based trade reporters, Gavin Bade from the Wall Street Journal, and Oliver Ward from POLITICO to discuss what this all means, and the road ahead in an escalating trade war.

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Hello, I'm Matt Galloway, and this is the current podcast. A ban on Canadian dairy, alcohol and motorcycles, even weigh protein and molasses, restrictions on Canadian access to some procurement programs as well. U.S. President Donald Trump hit back against Canada's retaliatory tariffs last night with a series of proclamations. The Canadian tariffs had just come into effect yesterday, and in a video, the Prime Minister, Mark Carney, said that while it's not constructive to escalate the conflict, these tariffs are, in his words,

necessary to protect Canadian workers, and he tried to explain to Canadians why his government walked away from negotiations last month, upping the escalation. The most fundamental issue is that the cumulative U.S. demands revealed that they wanted us to become even more reliant on them, not less. In too many areas, they wanted dependency, not a true economic partnership. We spent our entire program mystery speaking with Canadians about how you are making your way through this trade war. Now we've called up to Washington reporters to dig deeper into the American perspective.

Gavin Bade is a trade reporter at the Wall Street Journal and Oliver Ward is a trade reporter with political. They both join us now. Good morning to you both. Good morning. Gavin, Donald Trump spent the weekend posting memes about Canada on social media and then he went into action yesterday. Tell us about what the U.S. president did to step up this trade war.

Yeah, just as you said, this is a series of, executive orders yesterday that I think most importantly ban a few, well, or would in three weeks ban a few Canadian products from being imported in the United States. Most significantly, this is alcohol products, but also some dairy products and some other food products as well. And I think this is a clever ploy by the U.S. Trade Representative's office here to try to inflict some very concentrated harm on some key Canadian industries while not, you know, affecting the broader U.S. economy that much. From your perspective, Gavin, how significant are these moves?

I think there is significant escalation in terms of using new trade tools and going for an outright trade prohibition rather than just a tariff. But the ultimate, you know, what we've heard from the administration is they think that the ultimate amount of trade that's going to be affected by this is probably in the single-digit billion. So it's not going to dramatically disrupt the U.S. U.S. economy, although it will hit those targeted industries very hard. And so that's why I say, I think this was, you know, a way for the U.S. to step up the tension here and kind of escalate

this conflict without having some, you know, big ripple effects on the broader U.S. economy, especially in border states. Oliver, how do you understand this? You have a president who, you know, renames Lake Ontario and throws insults at our country and then, you know, threatens to ban Bombarjay from operating in the United States and then moves a... head with these sort of executive orders. What is the strategy behind all of this? Yeah, absolutely. He went into these latest round of tariff escalations, really focusing on three major trade irritants, one longstanding one involving Ottawa's management of its dairy import

quotas, and then took aim at Canada's retaliatory tariffs on US autos, and also the ongoing ban from US alcohol in some provincial liquor stores. So going into this, it seemed like there were some very targeted sectors that they were looking for some progress in and USMCA talks. We've got that six-year review of the North American Trade Pact ongoing, and progress with the Canadian side was maybe not moving as fast as the Mexican side. So it seemed like they really wanted to spur those talks. Now, the tit-for-tat escalation is, you know, in part.

because both sides came to negotiating table. Those talks fell apart, and either side wants to lose face following that. Is your sense that, and again, just because there are different strategies, it seems like, one is, you know, the renaming of Great Lakes and making memes of the president

beating up our prime minister and calling him a governor. And then there are these sorts of specific, whether they're bans on products or what have you, is there a through-law? Oliver through those various different strategies? Yeah, I would be cautious about drawing too much of the through line. This is, you know, how the Trump administration communicates.

It uses political communication and tools like social media to poke its opponents. And if you'll remember back in 2018 during Trump's first term, there was some pretty stern rhetoric from folks like Peter Navarro, a trade advisor to the president towards Justin Trudeau when he threatened to retaliate against US metals tariffs. And there was an off-front founded, you know, the USMCA, the North American Trade Pat was negotiated shortly after that. So I draw, I would maybe be cautious about suggesting the rhetoric and the economic discussions and also the actions are really super-connected. Gavin, at the end of August, you co-wrote a piece in the journal that suggested that perhaps

both sides were digging in for what could be a protracted trade dispute that maybe would run through the time after the midterm elections in November. What is your sense? Is the administration really digging in for that long haul? Yeah, it does appear so because in addition to the tariffs and trade prohibitions that we saw announced yesterday, there's also kind of a longer term threat here as well. Your listeners will remember Trump has already threatened to increase tariffs on Canadian vehicles and metals steel and aluminum to 50 percent, but that wouldn't kick in until January 1st of next year. Now, obviously, that would be, it's not only on Canadian vehicles, but also auto parts, and that would be ruinous for the Canadian auto industry, but also

very, very difficult for automakers and parts suppliers in states like Michigan in the United States. And so I think that that is still looming off in the distance. And you will probably see decides come back to the table at some point to try to negotiate something. Maybe that happens a little faster now because you do have those trade prohibitions going into effect in three weeks on September 29th. But I think, you know, there's obviously some political incentive for neither side to lose faces, especially when it comes to the U.S. in the midterm elections here. Can I ask you just one thing, and it's about the liquor bans, that there are many provincial liquor boards in this country that do not have U.S. alcohol on its shelves. And that seems to have

been a real thorn in the side of the... Do you understand why that one issue has wound people up so much? Well, I think that they hear from a lot of lawmakers, important lawmakers from, you know, states like Kentucky, right, where a lot of U.S. Bourbon comes from. And that's, you know, kind of a persistent issue that I think that, you know, the administration is responding to there. I also just think that the U.S., the administration is just very upset that Canada would have the temerity to retaliate to some of their trade measures here, right? Every time they do one of these things, we always hear the same line from Trump's team. It's that Canada and China are the only two countries to have retaliated. Now, if we remember what happened with China last year, there was this tit-for-tat escalation until we eventually got to nearly 150 percent tariffs.

there was a de facto embargo on trade between the U.S. and China for a few days there. What happened in that case was China had some Trump cards to play, so to speak. They said, well, we will cut off the export of these rare earth magnets that you need for automobiles and guided missile systems that really support the high-tech economy in the U.S. And Trump had to cry uncle. He had to come to the table and bring the temperature back down, bring those tariffs back down. So I think what we saw there was the U.S. trying to coerce China, trying to make China bend to their will, and finding out that they had actually overplayed their hand. Now, I think they don't want to see a repeat of that with Canada. They don't think that the Canadians hold as many cards as the Chinese when it comes to economic leverage in these conversations. And I think that just remains to be seen. One of the big leverage items that Mark Carney does hold right now is the midterm elections in the U.S. So this is a a very, very delicate time, and it's very unpredictable when you see kind of this escalation ladder

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Son of a critch, the final season. Stream now on CBC Jam. Delicate in part as well because, and I get to the midterms in a moment, but it's also delicate because of the cost of living crisis. We've been hearing from Canadian businesses, they're worried that industries in auto and lumber, small businesses that rely on the U.S. market,

that they might get squeezed or pinched really hard by this. In the United States, the Treasury Secretary, Scott Besson, said yesterday in an interview, with Breitbart news that he doesn't expect the United States to feel a thing. The pain to the U.S., there is none. And, you know, as a matter of fact, we just saw over the weekends, Sapporo brewing, the Japanese brewer said that they are moving because of all the trade uncertainty.

They are moving their production to the U.S. And if I were the Canadians, I'd be careful because they wanted the benefits of being a state, without being a state. And now that the arrangements may be splintering, everyone's going to come to our side. Oliver, is he right, that in this trade war, the United States will feel no pain? In the macro sense, the retaliatory measures

that Canada unveiled cover, you know, just a sliver of USX was, I think, around 6%. But what he may be overlooking, and Susan Collins, the Republican sales, Senator who's running in Maine would certainly say this. Some of the more micro and the more district level impacts, some of these communities in some quite tight midterm elections are going to feel this,

especially those that are dependent on kind of forestry and industries that ship a lot of goods to Canada. And maybe there's some sort of acknowledgement with this yesterday when amongst the executive orders that the Trump administration put out, there was some tweaks to the 50% tariffs they'd put in place earlier, sorry, last month, they narrowed them a little bit, they excluded things like road, salt, cement, a few hospital products. And these are products that Susan Collins and others had been calling on the administration to exclude from their tariff measures because of the impact they would have on their communities and the strain they might

put on municipal budgets. Gavin, there's reporting in your paper this morning suggesting that it's just a handful of states that will take the brunt of these tariffs. Michigan is one of them. You're from Michigan, and we spent a bunch of time down there before the last presidential election, talking to people in the auto sector about what they wanted. What is your sense as to how supportive people are in Michigan for what they're seeing from the Trump administration thus far? Well, I'd say that one thing that they don't support is this chaos and uncertainty, right? Michigan is not a free trading state by character, right? There's always been hefty support for trade protections, tariffs of one kind or another.

And we saw actually the United Auto Workers, at least in the U.S., support some of the early trade and tariff moves from this administration. I think what you're seeing now is that the chaos, especially in the U.S.-Canada relationship, is really turning a lot of people in these industries away from the Trump administration, at least when it comes to trade policy. I mean, I was back home in Michigan just last month, and everyone who worked in the auto sector, if it was my parents, friends or friends of friends, whatever,

they always grab them by the arm and say, what is going on? Are we going to have an auto industry next year because it is just so interconnected over the border? So I think you've seen the big three automakers mostly keep their head down in this conflict. You know, they got some modifications to the tariffs last year from the Trump administration

that made it workable for them. But I think if you see this 50% auto tariff and vehicle parts tariff start to get a little closer to going into effect to this fall, I think you'll see some renewed engagement there because that would be very, very difficult for the industry in the U.S. So you've both hinted at the midterms. And Oliver, one of the things we've heard from Canada's industry minister, Melanie Jolie, is that the government is being, in her word,

strategic and putting political pressure on certain states to try to get their attention in the lead-up to those midterms. What impact do you think this trade war will have on the results coming out of the mid-terms, Oliver? Yeah, it's maybe a little bit too early to say, but we know that polling shows that higher tariffs on Canada is not broadly popular in the United States. You know, I think you've had a poll out earlier this month that showed kind of 58% of Americans oppose higher. tariffs on Canada, and this rises to 64% among independence. So those swing voters that Republicans are going to try and get in the midterms, they really don't support these higher duties. And in that

sense, you know, there's maybe a juxtaposition between the US and Canada there, because on the Canadian side, we've seen widespread support for Mark Carney's position and taking a firmest stance against the US. And so even though the economic damage for Canada might be, be higher the political stakes for President Trump and his Republican allies are perhaps are perhaps larger going into these midterms. Gavin, what do you make of this? In part, because there is a narrative here in this country that you wait Trump out and maybe you wait until the midterms and things will change.

And then you will hear from people who say, well, hold on a second. This might be getting baked in to the American psyche, protectionism. So will the midterms change much of anything? I think that the midterms could, you know, should Democrats retake, you know, one or both houses of Congress. You know, you could see increased oversight of U.S. trade policy. I don't think you would see Congress pass anything that would end up actually constraining President Trump's tariff authorities because, of course, he would veto anything that would do that. You would have to have two-thirds to override, and that's just not going to happen, right?

I think the Trump strategy here is more just to rely on the bravado of this administration to appeal to voters, even if you don't like exactly what they're doing. I think what they're betting on is that by asserting the U.S. is dominant in this relationship and trying to subordinate another party, they can make workers in Michigan feel like they're standing up for them and hitting someone else, right? We're on your side, even if it's a little bit difficult now, you know, look at how we're striking out at this, you know, this other country and this is all for you, right? So I think there is a little element of trying to appeal to voters by hurting some. someone else here. And I think you see that across a lot of the Trump administration's policies, you know, trade economic, you know, immigration foreign policy. I think that there's a little bit of that element at play here. We just have a couple of minutes left. Let me ask you both about how this might end. And I ask you both because you're dialed into those conversations with

senior administration officials. Oliver, do you see somewhere on the horizon a sign that says there's an off-ramp ahead? Well, both Gavin and I heard yesterday from a senior administration official who said that there have been contact between the two sides in recent days. It's not clear whether that deal they nearly came to in August is still on the table or whether they would have to renegotiate parts of that or whether the office would be paired back. But, you know, as these tariffs and these bans and the rhetoric escalates,

it at some point somebody will have to blink and return to the table. It might be, as Gavin pointed out, before that January 1st flurry of 50% tariffs on steel and autos come into effect. But I think we're in for a bumpy road between now and then, that's for sure. Gavin, what about for you? Do you see, what's the way back to the table? I think the way back to the table is for, you know, there may have to be some element of Canada submitting to the bravado of the Trump administration. I think there's not going to be any sort of deal with dignity here.

they're going to try to embarrass the Canadian government as they've been trying to do. And I think, you know, even if there is kind of a more amenable tariff deal to be made, maybe it has to do with, you know, lower tariffs on vehicles, lower tariffs on metals. I think it's going to be very difficult for the Carney government to agree to something that would likely be framed as a victory for the United States. I just don't think that they see, they don't see these two countries as equals. They don't see us as operating at a level playing field or, you know, kind of sitting across. across the table is equals. And I think that's going, that dynamic of not, of not giving any dignity

to the Canadian side here in these negotiations, I think it's going to make it very, very difficult in the months ahead, because obviously, you know, you all are a proud nation and you don't want to take that from them. That is true. We heard that yesterday from listeners as we heard, listen to them coast to coast. It's good to speak with you both about this, and we'll check back in as this continues. Thank you both for being here. Thank you. Appreciate it. Gavin Bade is a trade reporter at the Wall Street Journal. He was in New York City, and Oliver Ward is a trade reporter with Politico. He was in Washington, D.C. You've been listening to the current podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon. For more CBC podcasts, go to cbc.ca.ca.