US-Canada relations appear to be entering a new and particularly turbulent period following the collapse of trade deal negotiations that, until recently, had seemed close to a breakthrough. Canadian Prime Minister Mark Carney rejected new conditions put forward by Washington and decided to walk away from talks with Donald Trump, opting instead to impose retaliatory measures.
This development intensifies the trade confrontation between the two countries, which have maintained close economic ties for decades. The outlook remains deeply uncertain, with no clear path to de-escalation immediately in sight.
For the Canadian Prime Minister, this decision goes far beyond a tough negotiating tactic. It represents a high-stakes political gamble — Carney now ranks among the few world leaders who have chosen to walk away from the negotiating table with the White House rather than accept a deal under duress. And, naturally, all eyes are on him.
He made his view of the conflict unmistakably clear. “You are at war when you are attacked — we were attacked,” he stated when asked whether the US and Canada are now engaged in a trade war.
That statement captures the shift in Ottawa’s position: the conflict with Washington is no longer viewed as a simple trade dispute over tariffs and terms of exchange, but as a broader confrontation that is testing both the resilience of the Canadian economy and the political resolve of the government in the face of White House pressure.
Carney: They asked for too much and offered too little
Both sides blame the collapse of the preliminary agreement on last-minute changes made in the final stages of negotiations.
Carney, however, was unequivocal about why he chose to walk away. The US, he emphasized, “asked for too much” and “offered too little.”
Speaking on Saturday, he stated that his government made the decision in the firm belief that it serves Canada’s national interest. “We are taking this step with the confidence that it is in Canada’s best interest,” he said.
He also accused Washington of a “show of force,” arguing that it attempted to alter the terms of the agreement at the eleventh hour.
Switching to French, he gave his remarks an even sharper political edge. The conflict, he noted, “was not our choice,” adding: “Canada is strong, Canada is ready, Canada is united.”
“Their signature is sometimes written in pencil”
Carney escalated his rhetoric further, taking direct aim at Washington’s credibility. The conditions imposed by the US just before talks concluded, he argued, “were unfair, economically unworkable, and called into question the reliability of any agreement.”
According to the Canadian Prime Minister, American demands covered both the automotive sector and restrictions he described as “unacceptable” regarding Canada’s ability to negotiate trade agreements with third countries.
He then delivered what was perhaps his sharpest dig at the Trump administration: “We recognize that sometimes their signature is written in pencil.”
With that remark, Carney made clear just how deeply trust has eroded between the two sides, implying that even a signed agreement with Washington could not be considered truly secure in terms of its longevity or enforcement.
Rallying behind Carney
Amid this escalating climate, Carney appears to hold a crucial political advantage: for now, he does not appear isolated.
Despite the significant economic risks that come with confronting the United States, provincial leaders and political figures appear to be lining up behind Ottawa’s hard line, reinforcing the image of a united domestic front.
On Saturday, the Canadian Prime Minister briefed provincial premiers on the latest developments, with initial public statements reflecting — at least at this stage — a broadly cohesive front.
British Columbia Premier David Eby declared himself committed to “the national endeavour we have undertaken,” while Ontario Premier Doug Ford was even more forceful: “We didn’t start this fight, but I can assure you we will win it.”
Ford’s words carry particular weight, given that Ontario — with its powerful manufacturing base and automotive industry — is among the regions hardest hit by the trade standoff between the two countries.
Ford had already warned Carney that a deal reached under pressure could “encourage the United States to demand one concession after another.”
That support reinforces the Canadian Prime Minister’s central argument: that backing down at this stage would not necessarily bring the conflict to a close, but could instead open the door to even greater demands from Washington.
Political backing for Carney is not limited to Canada’s provincial governments.
Conservative opposition leader Pierre Poilievre — who had previously described any arrangement involving “unilateral” tariffs against Canadian industry as a “bad deal” — endorsed the Prime Minister’s decision to walk away from talks, at least for now.
“Canada cannot accept unilateral tariffs that will deindustrialize our country,” he stated. His position reinforces the image of a broader political consensus against Washington’s pressure — at least as long as the economic cost of the standoff remains at levels that can be absorbed.
The big gamble
And that is the most difficult test facing Carney. His decision to stand up to Trump will ultimately be judged by whether Canadians are willing to accept economic losses in order to secure better terms and avoid caving to the demands of the Trump administration.
For now, polls suggest that a significant portion of public opinion supports a tougher approach.
An Abacus Data survey found that approximately 36% of Canadians support retaliatory measures against American tariffs, while a Leger poll showed that 56% want the federal government to hold firm and avoid making further concessions.
Carney, after all, rose to power on the slogan “elbows up” — a hockey expression signaling an aggressive, combative stance — pledging that Canada would resist the economic pressure of the Trump administration and its “America First” agenda.
He now faces the challenge of proving that this posture can be sustained even as the economic costs begin to bite.
The Canadian boycott is already costing the US
Canada’s response has not been limited to rhetoric. Canadians, angered by Trump’s tariffs, have already begun avoiding travel to the United States.
This boycott is estimated to have cost the US approximately CAD 3.3 billion, or USD 2.35 billion, in tourism revenue last year.
Meanwhile, most Canadian provinces have pulled American alcoholic beverages from store shelves, dealing a further blow to another US industry.
According to US government trade data, American wine exports to Canada fell by 78% year-on-year, with the lost export value estimated at $357 million.
The American distilled spirits industry paints a similar picture, claiming that bans imposed by Canadian provinces led to a drop of more than 70% in American spirits exports.
The issue has rapidly become a significant source of frustration for the Trump administration.
How the deal collapsed at the last minute
For roughly a week, all signs pointed to Washington and Ottawa being close to an agreement. Exactly how the talks fell apart in the final hours remains unclear. What does emerge, however, is that negotiations reached an advanced stage before breaking down entirely.
The American side offers a different account of what happened. US Trade Representative Jamieson Greer cited “new demands and walk-backs from other commitments on the part of Canada.”
The Distilled Spirits Council of the United States also argued that “the continued refusal of Canadian provinces to restore American spirits to store shelves led to this outcome.”
Canadian media also reported that US Commerce Secretary Howard Lutnick was dissatisfied with the deal taking shape. The BBC reached out to his office for comment.
The next move belongs to Trump
The collapse of the deal now raises broader questions about the future of US-Canada relations.
The fallout extends beyond the current tariffs, also casting a shadow over the ongoing review of the United States-Mexico-Canada Agreement (USMCA).
Carney has now drawn a clear line: Canada is not prepared to accept a deal simply to avoid further confrontation.
His strongest political card at this stage is that he is not standing alone. Canada’s provincial leaders appear united, the opposition backs the rejection of a deal it considers harmful, and a significant share of public opinion favors a harder line.
The risk, however, remains substantial.
As tariffs and counter-measures continue to pile up, Carney will need to demonstrate that the declaration that “Canada is strong, ready, and united” can hold firm — not just politically, but in the face of the very real economic costs of this confrontation.
For now, Canada has made its choice. The next move belongs to Donald Trump.
