Escalated U.S.-Canada trade talks threaten fallout
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Newsletters Axios Local Show Axios Pro Axios Live The Axios Show Login Axios All topics Axios Search 6 hours ago - Economy Escalated U.S.-Canada trade talks threaten fallout Courtenay Brown , Neil Irwin email (opens in new window) sms (opens in new window) facebook (opens in new window) twitter (opens in new window) linkedin (opens in new window) bluesky (opens in new window) Add Axios on Google Add Axios as your preferred source to
America's path to lower inflation depends in part on trade wars and actual wars becoming less economically disruptive. In recent days, both have taken turns that threaten the opposite.
Why it matters: A period of relative calm on those fronts is now giving way to renewed tensions, with Canada, China and Iran all posing fresh economic risks.
What's going on : The U.S.-Canada trade fight is shaping up to become an all-out trade war, threatening economic and political fallout on both sides of the border. Neither side is backing down, with Canada expected to target politically sensitive U.S. sectors with tariffs in the run-up to the midterms.
Zoom in: U.S.-Canada trade talks collapsed Friday night , triggering 50% tariffs on roughly $20 billion of Canadian goods, including wine, cement and dairy products.
It was a swift reversal. Trump announced that the two countries were nearing a deal three days earlier.
Zoom out: Over the weekend, both sides blamed the other for the talks blowing up.
What they're saying: In a speech on Saturday, Carney said that the decadeslong path toward greater U.S.-Canada economic integration was over.
The big picture: Economists had growing confidence that the inflation hit from Trump's tariffs was largely in the past. The new Canada tariffs — and any further tit-for-tat actions — threaten to restart that process just as the Iran war's energy shock is putting fresh upward pressure on prices.
The bottom line: The disinflation outlook was counting on calmer trade and energy. Both now look like sources of fresh uncertainty.
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