The trade war between the US and Canada is escalating.
On Tuesday, Canada announced retaliatory tariffs as high as 50% on a range of American products. They are set to take effect on September 8 and will impact sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, Canada said.
The move comes after President Donald Trump's 50% tariffs on some Canadian goods took effect on Saturday, and after Trump threatened on Monday to impose another batch of 50% tariffs on Canadian-made products. Those tariffs would affect cars, trucks, auto parts, and steel, and would take effect on January 1.
Trump also said on Tuesday that he's considering renaming Lake Ontario to Lake America.
"The United States is giving serious consideration to changing the name of Lake Ontario to Lake America in that we don't expect to doing much business with Ontario any longer," Trump said in a Truth Social post.
Canada, led by Prime Minister Mark Carney, is one of America's most intermingled economic partners.
The countries have been trying to ease tariffs and disputes ahead of the scheduled review of the USMCA, the North American trade pact negotiated by Trump in his first term. That deal replaced NAFTA.
Here's what smart people are saying about the impact of the fresh tariff threats.
In a Tuesday op-ed, Steve Forbes called for an immediate end to the escalating trade fight, writing that it "will damage both countries" and is "utterly pointless."
Forbes, a former Republican presidential candidate, argued that tariffs are taxes ultimately borne by businesses and consumers. He said Trump's proposed 50% duties on Canadian vehicles and parts would disrupt deeply integrated North American supply chains and raise car prices.
"Trade should make goods more affordable and economies more prosperous," he added in a post on X. "Current tariffs are doing the opposite, raising costs for American consumers."
Paul Krugman, the Nobel laureate economist and former New York Times columnist, wrote in a Substack post Monday that he still has to "rub my eyes at the idea of Canada as an enemy." He called Trump a "bully."
Krugman said Canada begins the fight at a clear disadvantage: The US economy is roughly 12 times larger, and the US buys about three-quarters of Canadian exports. Still, he argued that a trade war could inflict serious pain on the US because it depends on some imports from Canada.
He pointed to specialized Canadian lumber, heavy crude oil used by Midwestern refineries, and hydropower that is an important part of the electricity supply in New York and New England. He also said disrupting cross-border auto and auto-parts trade would be "immensely disruptive" to the industry on both sides of the border.
"The bottom line is that Trump is going to lose his trade war with Canada as thoroughly as he has lost his shooting war with Iran," he wrote.
Source: Read the original article on www.businessinsider.com
