Why Canada Won't Back Down to Trump

**Ryan Knutson** (0:05)
The US and Canada are fighting again.

**SPEAKER_2** (0:10)
Dropping the gloves to fight an all-out trade war. President Trump slapping 50% tariffs on 20...

**SPEAKER_3** (0:16)
Canada imposed retaliatory tariffs against the United States today as the two neighbors slide toward an all-out trade war.

**SPEAKER_2** (0:23)
Escalating trade war with Canada has ruptured a once close and durable alliance.

**Ryan Knutson** (0:30)
Last month, the Trump administration threatened Canada with a 50% tariff on certain Canadian goods. And last weekend, those tariffs went into effect.

**Gavin Bade** (0:40)
So Trump kind of re-ignited this trade conflict on his own accord.

**Ryan Knutson** (0:44)
Then Canada hit back.

**Gavin Bade** (0:47)
I think the Canada tariffs are really interesting because, as we'll get into, Canada is really the only US ally to retaliate to Trump's tariffs with tariffs of their own.

**Ryan Knutson** (0:58)
That's our colleague Gavin Bade. He covers trade policy.

**Gavin Bade** (1:02)
And that's why you see us periodically get into one of these tit-for-tat tariff encounters or conflicts with our friends up in Ottawa, because they actually stand up to Trump, whereas a lot of other people have not.

**Mark Carney** (1:16)
America is trying to break us so they can own us. And I promise that that will never ever happen.

**Ryan Knutson** (1:28)
Yeah, how would you characterize this moment that the US and Canada are in?

**Gavin Bade** (1:32)
You know, I think there's a lot of bluster and a lot of tension on the surface. The US administration showing they really want to publicly pressure Canada, and they really want to show that they are the dominant nation in this relationship. But they also don't want to affect the US economy that much before the midterms. So it's an interesting, nuanced situation going on here that I think goes beyond the bluster in Trump's Truth Social Posts.

**Ryan Knutson** (1:56)
Gavin says that this latest resurgence of the tariff trade war is different. The bluster is escalating because both President Trump and Canadian Prime Minister Mark Carney have refused to blink.

**Gavin Bade** (2:08)
They were supposed to come to an agreement, and then right before the tariff deadline, things fell apart and we saw that the US imposed tariffs, then Canada came back and said they would impose more tariffs, then the US said, well, if you do that, we'll impose more tariffs. And so we can see the ball is kind of rolling down the hill here.
And what's at stake is the health of both economies and also the political future for both leaders.

**Ryan Knutson** (2:33)
Welcome to The Journal, our show about money, business and power. I'm Ryan Knutson. It's Wednesday, August 26th.
Coming up on the show, why Canada won't back down to Trump.

**SPEAKER_6** (2:58)
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**Ryan Knutson** (3:37)
The two men at the center of this trade fight are US President Donald Trump and Canadian Prime Minister Mark Carney. And it was Trump who started it.

**Gavin Bade** (3:46)
So in Trump 2, initially what Trump did was he came in and he put these tariffs on Canada, Mexico and China supposedly for their role in fentanyl trafficking.

**Donald Trump** (3:55)
And they've killed 300,000 people last year, my opinion, have been destroyed by drugs, by fentanyl. The fentanyl coming through Canada is massive.

**Gavin Bade** (4:08)
He said there was fentanyl that supposedly was coming over the US border from Canada. This is killing Americans. And they said that Canada wasn't doing enough to stop it. So they said, we're going to put this tariff on Canada.

**Ryan Knutson** (4:19)
And this is like one of the first tariffs that the Trump administration imposed, right?

**Gavin Bade** (4:22)
Indeed, these are the first tariffs that Trump imposed in Trump too. And so right off the bat, they're kind of the Canadians were really aghast that why would you come back and hit us like this? There's not much fentanyl at all going over the border from Canada by the admission of customs here in the US. So they thought, why is this even happening?

**Ryan Knutson** (4:41)
It wasn't just the tariffs. Trump was also openly antagonizing Canada.

**Donald Trump** (4:45)
Canada has been very, very bad. It's very unfair to us on trade. So we'll see how it all works out.