Source: Financial Times

As trade tensions between the United States and Canada escalated, U.S. President Donald Trump claimed on the 25th, local time, that he is considering renaming Lake Ontario as the “American Lake.” That day, Trump wrote on social media: “The United States is seriously considering renaming Lake Ontario as the ‘American Lake,’ because we expect that in the future we won’t have much business dealings with (Canada’s) Ontario.” The proposal quickly drew opposition from Canada. In the days prior, Trump imposed new tariffs on Canadian goods and threatened to continue raising tariffs in January 2027.

Lake Ontario is one of the five Great Lakes in North America, located on the border between the United States and Canada. The lake region is bordered to the north by Ontario, Canada, and to the south by the U.S. state of New York. In recent years, Trump has repeatedly taken a tough stance on issues involving the U.S.’s neighboring countries. Canada is the United States’ second-largest trading partner, but it has continued to be criticized by Trump over trade matters. Trump once proposed making Canada the 51st U.S. state, a move that Canada has consistently rejected. From the “51st state” to “an American lake,” the Trump administration’s increasingly hardline approach toward Canada is escalating the trade dispute between the two countries.

Doug Ford, Premier of Ontario, firmly opposes Trump’s stance and has made it clear to Trump that “Canada will never be sold.” The U.S. intent to swallow Canada in “this game” will not be something Canada will play along with.

On August 24 local time, Ford said that Canada did not start this fight, but it is ready to win. If Trump chooses to escalate the situation, Canada must prepare for an equivalent retaliation, precisely targeting the voting strongholds of the Republican Party in order to “ensure that the United States genuinely feels the pain.” Ford said Canada needs to “spend every means at its disposal” to respond; if the trade dispute is further escalated, Canada should be prepared to cut off U.S. electricity and supplies of critical minerals.

On July 20, Trump signed multiple proclamations, invoking Article 338 of the (Smoot-Hawley Tariff Act) to impose an additional 50% tariff on hundreds of specific U.S. goods imported from Canada, including red wine, hockey sticks, and cement. Subsequently, the two countries held trade negotiations last week, but reached no agreement. The U.S. then announced 50% tariffs on Canadian goods worth USD 20 billion. Canada announced that it would impose equivalent retaliatory tariffs on the U.S. starting September 8. On the 24th local time, U.S. President Trump threatened that starting January 1, 2027, import tariffs on products such as Canadian automobiles, automobile parts, and steel would be raised to 50%.

In response, Canada took a tough stance to push back.

On the 25th local time, the Canadian government announced that it would impose retaliatory tariffs on more than 700 types of U.S. goods worth CAD 27.6 billion (about USD 20 billion), and it would also roll out a business and worker assistance program totaling CAD 7.5 billion (about USD 5.4 billion). Canadian federal officials said the total value of U.S. goods affected by the retaliatory tariffs is roughly equivalent to the value of goods subject to the 50% tariffs imposed by the U.S. on Canada, achieving “equal for equal, reciprocal for reciprocal” retaliation.

According to the retaliatory tariff list published by Canada’s Ministry of Finance, the targeted retaliatory tariffs in this round mainly focus on steel and aluminum, dairy products, home appliances, agricultural equipment, pulp and paper, plastics, and electronic products. The tariff rates are set in three tiers—15%, 25%, and 50%—which correspond to the tariff levels that the U.S. applies to Canada for similar goods. Among them, most steel and aluminum products imported from the U.S. will see their tariffs raised from 25% to 50%; dairy products such as cheese, fish and seafood, and some steel and aluminum derivatives will be hit with a 25% tariff; other existing retaliatory tariffs, including those targeting U.S. automobiles, will also remain in place.

The Canadian government said these tariffs are intended to protect Canadian businesses and jobs affected by U.S. measures.

In addition to retaliatory tariffs, the Canadian government also announced a support plan totaling CAD 7.5 billion (about USD 5.4 billion), focusing on helping small and medium-sized enterprises hit by the trade war. On labor protections, the government will expand the “work sharing program” and “worker retention subsidies” to help companies avoid layoffs, enabling more employees to upgrade their skills or receive retraining, while increasing flexibility in eligibility for unemployment insurance benefits.

Everyone is watching

Source: Financial Times client

Reporter: Han Xuemo

Editor: Yang Jingyi