Canada PM Carney Vows to Backstop Economy as U.S. Trade Row Escalates -- 2nd Update

By Paul Vieira

OTTAWA--Canadian Prime Minister Mark Carney said his government will "do whatever it takes" to backstop regions and industrial sectors targeted by U.S. tariffs as the trade conflict between the neighboring and closely-integrated economies enters a precarious stage.

In an address posted on YouTube, Carney said retaliatory tariffs on about $20 billion in U.S. goods that kicked in on Tuesday were necessary to protect domestic sectors and workers. "I don't believe in escalating the conflict," said Carney. "The harsh reality is that the American tariffs will hurt some Canadians or others, and that was by design."

As a result, "we will do whatever it takes for as long as it takes to bridge those people" in affected sectors "to a better future," he said. Carney added that his Liberal government would in the meantime pursue policies that reduce dependence on trade with the U.S. to power growth, although warning this would present economic turbulence.

"This won't be easy, and I won't pretend otherwise," he said.

Canada's new tariffs of between 15% and 50% are in response to 50% duties that the Trump administration imposed last month following the surprise collapse of trade talks between U.S. and Canadian officials. In mid-August, the two sides were confident that a pact that would provide sizable tariff relief was near conclusion. But those talks broke off, with both sides alleging their counterparty demanded last-minute changes that would make a deal untenable.

In his video address, Carney said a "fair deal wasn't on the table," adding some elements would, over the long haul, lead to the demise of key domestic sectors such as automobiles, steel and forest products. "We made the right choice to walk away from a bad [deal]," the Canadian leader said.

The White House has said Canada was offered the most generous agreement among all key U.S. trading partners.

In the aftermath, President Trump and administration officials have cranked up warnings about Canada's future, and ordered that one of the Great Lakes, Lake Ontario, be renamed Lake America following sharp language about Trump from Ontario's Premier, Doug Ford.

In posts on Truth Social over the weekend, Trump mused about banning the sale of aircraft built by Montreal-based Bombardier in the U.S., and suggested the Canadian dollar was undervalued. Shares in Bombardier were down over 4% in the Toronto stock market, and the Canadian dollar was slightly stronger relative to its U.S. counterpart, in trading early Tuesday.

Bank of Canada Gov. Tiff Macklem said last week the recent intensification in U.S.-Canada trade tensions posed a risk to economic momentum. Canada's economy had stagnated for roughly a year following the start of Trump's second term, as companies either canceled, curtailed or delayed spending and hiring plans due to the upheaval in U.S. trade policy. In recent years, trade with the U.S. accounted for about 20% of Canada's gross domestic product, making the country one of the most exposed to Trump's expanded use of tariffs. Based on individual countries, Canada is America's second-largest trading partner, after Mexico.

Carney said that Canada's economy became more integrated with the U.S. over the past four decades. This phase is now over, he said, in reference to past themes about the need to rewire an economy that grew too comfortable and complacent because of preferred access to the U.S. market. "We have everything we need to pivot and prosper. That pivot will come at a cost," he said in the YouTube address. "There's always a cost to action, but it doesn't come close to the cost of standing still."

Carney and the Liberal government enjoy solid public support amid the nasty turn in U.S. trade relations, according to polling issued Tuesday by the Angus Reid Institute. The polling organization said 62% approve of the prime minister's performance, or up from a 51% level in August. Three-quarters of Canadians indicate the prime minister was right to walk away from trade talks with Washington, Angus Reid added.

Write to Paul Vieira at paul.vieira@wsj.com

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September 08, 2026 10:44 ET (14:44 GMT)