Canada and the United States are in a serious trade fight. US President Donald Trump has threatened new taxes on Canadian goods. Canada sends about 70% of its goods to the US. But Canada is also an important buyer for many US states. Canadian Prime Minister Mark Carney plans to put the same amount of tax on some US goods. These may include steel, milk products, farm machines, electronics, and paper.

Canada could also use its energy and natural resources. It supplies most US imports of natural gas and electricity. It also supplies about 60% of US crude oil imports. Ontario leader Doug Ford said Canada may add a 25% charge to electricity for some US states. Canada also sells the US potash for farms and important minerals for batteries. Many Canadian provinces have already stopped selling US alcohol. US wine sales to Canada fell by 78%. Canadians also made 800,000 fewer trips to the US in April than in April 2024.

This trade fight will also hurt Canada. New US tariffs could reduce Canada’s economy by 0.3% to 0.6% for a short time. However, a recent poll says 76% of Canadians support Carney’s strong position. US families may pay about $1,100 more each year because of Trump’s tariffs. Carney says workers in US car factories may also lose money or jobs. Canada may announce more help for its workers and businesses on Tuesday. It may also target US states before the coming US elections.