Canada has retaliated against U.S. tariffs with $21 billion in trade duties, escalating tensions in an ongoing global trade war. The move follows the Trump administration’s universal steel and aluminum tariffs and mirrors similar measures from the European Union, which imposed $28 billion in duties on American goods. China has also signaled its readiness to respond.

The trade dispute threatens economic stability, with stock markets reacting negatively. After a promising inflation report initially lifted markets, investor concerns over rising costs led to losses, particularly in U.S. automaker stocks. Analysts from Barclays noted that when Trump previously imposed similar tariffs, Ford and GM reported weaker profitability.

Canada, the U.S.’s largest supplier of steel and aluminum, criticized the tariffs as “unjustified, unfair, and unreasonable.” François-Philippe Champagne, Canada’s minister of innovation, science, and industry, warned that the measures would raise prices for consumers in both countries. The retaliation comes despite a temporary resolution on a separate dispute involving Canadian electricity exports, which had seen threats of a 25% surcharge.

Mark Carney.

Trump has framed the tariffs as a way to counter trade imbalances, arguing that other nations are taking advantage of the U.S. He claims this is reflected in America’s growing trade deficit. However, while America’s imports are at record levels, so are its exports. Economists caution that the tariffs could jeopardize as many jobs as they aim to protect, particularly in industries dependent on imported raw materials.

Beyond economic concerns, the administration has linked trade disputes with Canada and Mexico to illicit fentanyl flows, though the justification remains unclear. Trump has maintained that the tariffs serve a broader vision, declaring, “This is the beginning of making America rich again.” While the administration has yet to officially respond to Canada’s latest measures, it has signaled it will retaliate if necessary.