The administration of US President Donald Trump warned Canada on Sunday of the potentially “devastating” consequences of a further escalation in trade tensions between the two countries, as economic relations between Washington and Ottawa continue to deteriorate.

US Transportation Secretary Sean Duffy said Canada could not afford to enter into a trade conflict with the United States and predicted that Canadian Prime Minister Mark Carney would soon return to the negotiating table.

“We are very good trading partners,” Duffy said on Fox News, while arguing that Canada benefits more from trade with the United States than Washington does from trade with its northern neighbor.

The US official also described the idea of Canada engaging in a “war” with the United States as a mistake, warning that the consequences would be particularly damaging for the Canadian economy.

Ottawa Announces Retaliatory Measures

Mark Carney announced new retaliatory trade measures on Saturday targeting, among other products, US steel and dairy goods. The Canadian tariffs are set to take effect on September 8.

The decision came after new 50% US tariffs entered into force on Saturday, affecting products representing around 5.5% of Canadian exports to the United States.

After several weeks of negotiations, the Canadian prime minister decided on Friday evening to end the talks, shortly before a White House deadline for the new tariffs expired.

Carney justified the decision by saying Canada had been “attacked” and that the US demands were excessive compared with what Washington was offering in return.

Trade Tensions Reach a New Level

Since Donald Trump returned to the White House in January 2025, Canada has been at the center of the US president’s aggressive trade policy. Trump has repeatedly floated the idea of turning Canada into the “51st state” of the United States.

The latest round of tariffs marks another step in the deterioration of relations between the two countries. Some of the US measures target products that would normally benefit from protections under the free-trade agreement linking the United States, Canada and Mexico.

The escalation is now creating further uncertainty for North American trade and economic relations between Washington and Ottawa.