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Donald Trump is facing a domestic backlash over the collapse of trade talks between the United States and Canada, as the countries’ deteriorating relationship risks more financial pain for Americans ahead of midterm elections.
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U.S. lawmakers, governors and business leaders warned that Washington’s new tariffs on Canadian goods would increase costs for American households and companies, while a Federal Reserve official said that protracted sparring between the trading partners could help keep inflation stubbornly high.
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Trump’s tariffs targeting US$20 billion worth of Canadian goods went into effect on Saturday on top of existing levies on steel, aluminium, lumber and vehicles, after talks between Washington and Ottawa broke down on Friday night.
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Prime Minister Mark Carney said Canada would soon announce “dollar-for-dollar” retaliatory levies on American goods, while U.S. trade representative Jamieson Greer said Washington would respond to Ottawa’s retaliation.
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U.S. senator Susan Collins of Maine, a Republican whose state borders Canada, said that the “on-again/off-again trade talks” between the allies would “lead to higher costs, risk and uncertainty for Maine businesses.”
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The new tariffs would “increase costs for Maine families, as most businesses will have no choice but to pass on the tariffs to their customers through higher prices”, she added.
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Collins, who is facing a tough re-election battle in November as Republicans and Democrats vie for control of the Senate, said Trump “must consider the negative impact of tariffs” and “work to reach a fair agreement” with Carney’s government.
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Trump’s first-term vice-president Mike Pence told CNN on Sunday that “the last thing we need right now, as our economy is getting back on its feet, is a trade war with Canada.”
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Washington and Ottawa have accused each other of sabotaging trade talks with last-minute demands.
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Democratic governors of states with high imports from and exports to Canada said the hit to their constituents would be swift and could result in lost American jobs amid an already cooling labour market.
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Governor Gretchen Whitmer of Michigan, which borders Canada and is the home of the American auto industry, said her state was “uniquely impacted” by “the tariff wars” with Ottawa. Fresh levies amounted to a “tax hike on Michigan families and businesses by raising prices at the grocery store and the gas pump.”
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“Companies — especially our auto manufacturers — face the difficult decision of laying off workers or passing costs on to their customers,” she said.
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Virginia governor Abigail Spanberger said Canada was her state’s top export destination and that the fresh levies on Canadian goods would “hurt Virginia families, farmers, producers, foresters and businesses” in “a matter of days .”
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