President Donald Trump is threatening Canada with economic destruction amid an escalating trade war. He's not factoring in one key U.S. disadvantage.
Americans are not nearly as gung-ho for a tariff stand-off as their northern neighbors, who have been seething for months over Trump's rhetoric against their country.
"The U.S.A. will always be far bigger, richer, and stronger than Canada," Trump wrote in a second Truth Social post. "Someone should get these clowns to 'fall in line' or, the consequences for Canada will be far WORSE!
The U.S. economy certainly dwarfs its northern neighbor's. And while Ottawa has managed to support big sectors such as aluminum and forestry to keep them afloat amid tariffs Trump launched last year, it's not clear how long the Canadian government can support small and medium-sized businesses in a prolonged tariff tit for tat. But poll after poll shows Canadians across the political spectrum are willing to accept those impacts in order to stand up to the U.S. government.
The opposite is true in the U.S., where even many in the president's own party oppose Trump's trade agenda — particularly his tariffs on Canada. And unlike Carney, the president faces a voter referendum in November, in the form of midterm elections.
As the two countries settle in for a long-term standoff, the outcome is likely to be defined by each government's ability to endure pain: economic in Ottawa and political in Washington.
"I think right now the U.S. has more to lose because we have the election coming up in November, where the economy and tariffs are already an issue," said one former official at the Office of the U.S. Trade Representative, granted anonymity to discuss the sensitive talks. "If it spirals, Congress would be the one to feel the impact."
Canadian Prime Minister Mark Carney has promised "dollar-for-dollar" duties against U.S. goods in response to a 50 percent tariff on roughly $20 billion in Canadian imports. Those duties went into effect Saturday after talks to lower tariffs and other trade barriers collapsed late Friday night.
The new duties affect just a small slice of overall trade between the two countries, which totaled roughly $900 billion in 2025. That makes Canada one of the top U.S. trading partners, but America also has massive commercial relationships with Mexico, the European Union, China and parts of Southeast Asia.
On paper, the tariffs are a much bigger threat to Canadian businesses. Roughly three-quarters of Canada's exports go to the United States, accounting for nearly a quarter of its GDP — an exposure that dwarfs anything the U.S. faces in return, given that Canada's economy is a fraction of the size of its southern neighbor.
"It will be very hard to try to work around these tariffs," Canadian Federation of Independent Business President Dan Kelly said in an interview. Forty percent of small businesses that export to the U.S. are affected by the new tariffs, he said. And a recent survey of the CFIB's more than 100,000 members revealed some grim forecasts of the damage the 50 percent duty would have on small and medium-sized businesses across the country.
"A third of them said that they expected their total sales to drop by 50 percent or more with some saying basically they expect all of their U.S. sales to dry up," Kelly said, adding that he hopes to see Ottawa announce direct cash support to affected businesses this week. "The programs to date have been terrible."
But Americans, already sour on tariffs, are much more likely to be angry about any hint of cost increases or economic impacts than Canadians.
And Trump's threat Monday to expand the 50 percent tariffs to Canadian steel, cars, trucks and parts only ups the ante, compounding uncertainty for the U.S. business community and particularly the highly integrated North American auto sector.
POLITICO polling in December found just over a third of voters believed Trump's tariffs would eventually benefit the U.S. economy and a June poll by The New York Times and Siena found that 54 percent of likely voters in battleground states disapproved of the duties, including 59 percent in Maine, home to a key race in the battle for control of the Senate.
The White House has been subtly responding to the pressure to address affordability. While Trump has not cut back on his tariff threats, his administration has moved to exempt scores of products — more than half of all imports are exempted from the sweeping duties Trump unveiled in July. New tariffs that would apply to specific industries, like solar panels and aerospace products, have either been delayed until after the midterms or forgone altogether.
"President Trump ascended to the White House on a clear promise to the forgotten men and women of America that they would be forgotten no longer," said White House spokesperson Kush Desai. "Countless American workers, farmers, and businesses have borne the brunt of America's lopsided trade relations, including with Canada which has demanded total access to the American market without reciprocity. President Trump will never stop fighting to put Americans and America First."
Republican lawmakers are largely remaining mum about the new tariffs and the retaliation Carney says will take effect early next month. Rep. John McGuire (R-Va.) said in an interview Monday morning that he was confident that Trump's negotiating tactics would bring "trillions back" into the U.S., even if others believe his strategy is "unusual" or "unorthodox."
But Sen. Susan Collins (R-Maine), who has publicly opposed broad tariffs on Canadian goods, told reporters Monday the new U.S. tariffs are a "mistake," noting many of Maine's industries rely on Canada's processing facilities. The latest round of tariffs, she said in a statement, will "increase costs for Maine families."
Sen. Thom Tillis (R-N.C.), who is not running for reelection, was more candid, taking aim at the Trump administration's broader tariff regime.
"We've got 71 days [until midterm elections], and right now we don't have a positive message to sell farm country, and we haven't since Liberation Day last year, which is why I was concerned," he said, according to a video posted to X on Monday. "That's exactly why I asked whose throat I got to choke if Liberation Day failed last year, and it failed. And that person is [Commerce Secretary] Howard Lutnick, and these people that are micromanaging this economy need to figure that out."
The fallout could hand Democrats in Maine and Michigan, another 2026 battleground, a prime example of how Trump's policies are hurting their communities, said one person close to the Trump administration who met with senior officials last week — particularly if Canada's retaliation hits politically sensitive U.S. industries or the trade war expands to a broader range of goods.
"If this gets worse, congressional Republicans, in select states and districts, are going to be the first ones to feel it," said the person.
But David L. Cohen, the U.S. ambassador to Canada under former President Joe Biden, said Trump is a unique politician that doesn't care as much about elections where he's not on the ballot. Cohen said that the political pressure will have to come from businesses who are affected by the tariffs, rather than the GOP.
"That's the pressure point. I don't think it's pure politics," Cohen said. "I think it is the pressure from consumers, from businesses, from business associations."
In Canada, Carney's decision to walk away from the talks has earned broad support. More than half of Canadians support Ottawa taking a hard-line stance against Trump, according to a recent Leger survey, which includes not making any new concessions after previous ones failed to avert new tariff threats. Provincial premiers — who are responsible for the bans on U.S. alcohol that have cut exports to Canada by more than 70 percent — have also rallied around with the prime minister's decision to walk away from trade talks.
"We're stronger now than when the United States started this trade war," Carney told reporters in Ottawa on Saturday. He referenced an uptick in exports to non-U.S. countries and Canadian job growth outpacing employment gains stateside as a contrast to the American negotiation position. "Canada is becoming stronger and less dependent on America," said Carney. "And we are just getting started."
While retaliatory tariffs are politically popular among a majority of Canadians, Carney didn't rule out the possibility of striking a deal to prevent further damage. Hours after Trump's new auto and steel tariffs Monday, the prime minister said Canada would return to the negotiating table if there's a change in attitude from the American side.
"There is a mutually beneficial deal possible here," he said in Lévis, Quebec.
But a path to a mutually beneficial deal is now more challenging, according to former trade officials, and it could be months before both sides are willing to reopen negotiations.
"I think the U.S. may just not be able to get back to the deal that was on the table last Friday, and that's just something that both sides are going to have to contend with," said a trade lobbyist, granted anonymity because they were not authorized to speak on record. "The president was still prepared to go forward with that deal, and then the Canadians rejected their best offer. I think that makes it really hard for the U.S. side."
Even if one side blinks first and pushes to reopen negotiations, it could take weeks or longer to iron out the thorny issues that led to the breakdown in talks last week, a separate former trade negotiator said. Neither party will want to appear to have caved under pressure from the other side, meaning a resolution would likely have to look materially different from the deal they walked away from.
"This isn't something that's going to turn around," the former negotiator said. "You can come off the ledge, but you're still going to want to show something" for it.