US-Canada Trade War Escalates as Trump Invokes Depression-Era Tariff Tool

A trade conflict has erupted between the U.S. and Canada, initiated by President Donald Trump’s activation of the Smoot-Hawley Tariff Act of 1930. On August 25, 2026, Canada retaliated by implementing tariffs as high as 50% on American goods. In response, Trump lambasted Canada, while Prime Minister Mark Carney accused him of attempting to undermine Canada's automotive sector. The U.S. retaliated with 50% tariffs on $20 billion worth of Canadian exports, which included textiles and auto parts. Canada, in turn, placed $20 billion in tariffs on U.S. goods, focusing on swing states. Trade negotiations fell apart after U.S. Commerce Secretary Howard Lutnick retracted tariff reductions, prompting economists to caution about potential wider economic repercussions and effects on the midterm elections.