Carney says US trade war 'will come at a cost' as Canada strikes back on tariffs

Prime Minister Mark Carney has said that Canada's pivot away from the US as its largest trading partner "will come at a cost", as a wave of Canadian retaliatory tariffs on American goods come into force.

In a video address, Carney added that the counter-tariffs against the US "are necessary to protect our workers".

Canada's levies will apply to nearly C$28bn ($20bn; £15bn) of American products, from steel to furniture to cotton T-shirts, and will be as high as 50%.

Both US and Canadian officials have said they would like to strike a deal, but no new talks have been scheduled since negotiations collapsed in late August.

In Tuesday morning's 15-minute video address, Carney said his country's main focus was to diversify its trade relationships and build its economy.

He added that his government would also support workers affected by the ongoing trade war with the US "for as long as it takes".

"We have everything we need to pivot and prosper," the prime minister said. "That pivot will come at a cost.

"There's always a cost to action, but it doesn't come close to the cost of standing still."

US trade representative Jamieson Greer meanwhile said that Washington would consider imposing tit-for-tat tariffs on Canada as early as Tuesday.

"We'll see this afternoon," he said in French, speaking to CBC News.

President Donald Trump threatened on Monday to halt all US business with Canada-based airplane maker Bombardier unless it moved its manufacturing south.

The aerospace giant is one of the largest in the country, contributing over C$7bn to Canada's annual GDP in 2024, according to a report by accounting firm PwC that was commissioned by Bombardier.

Trump argues that these import taxes encourage consumers to buy American-made goods and boost investment in the US from foreign companies.

But economists warn that prices rise for consumers on everyday goods that are targeted by tariffs.

Opinion polls suggest the majority of Canadians support, external their country imposing retaliatory tariffs on the US.

The Canadian Chamber of Commerce has urged the Carney government to take a surgical approach to retaliation.

"Businesses understand retaliation but don't want to see endless escalation," the Chamber's CEO and President Candace Laing told the BBC on Friday.

Pushback from the fisheries industry was enough for Canada to alter its counter-tariffs by removing dozens of seafood items to avoid unintended consequences to its own economy.

The lobster industry in both Canada and the US is heavily dependent on the other, with American-caught lobster often sent north to be processed before it is shipped back to the US and sold.

Ahead of the latest tariffs, Canada's economy had shown signs of resiliency. Its GDP grew 3.3% in the second quarter and it had gained 181,000 jobs from April to July.

But around 41,000 jobs were lost in August, a period that coincided with the new US tariffs on Canada and the collapse in trade talks.

One sector that saw a modest bump was manufacturing - a gain the Canadian government attributes to consumers and businesses buying more made-in-Canada products.

Data shows that Canada is also diversifying its trade.

The share of US-bound Canadian exports dropped to 66% from an average of 75% before the trade war, according to July trade figures.