Carney warns Canada’s economic pivot away from U.S. will come at a cost

By Tahani Elghazaly
Published September 8, 2026

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Prime Minister Mark Carney warned Tuesday that reducing Canada’s economic dependence on the United States will come at a cost, but said maintaining the country’s current level of reliance would ultimately prove more damaging. His warning came as a new round of Canadian counter-tariffs on U.S. goods took effect on September 8.

In a national video address, Carney said Canada will continue expanding its trade relationships and pursuing agreements with other countries as part of a broader effort to reduce its dependence on the U.S. market. He said Canada has the resources and capacity to reshape its economy and generate growth, while acknowledging that the transition will involve economic costs.

The prime minister said his government is seeking to build a stronger and more resilient economy that is less vulnerable to pressure from any single trading partner. He argued that the costs associated with changing course are outweighed by the risks of leaving Canada’s economic exposure to the United States largely unchanged.

Canada’s new tariffs took effect at 12:01 a.m. Tuesday, with rates of 15, 25 and 50 per cent applied to U.S. products covering C$27.6 billion in imports. The measures were introduced in response to Washington’s decision to impose a 50 per cent tariff on C$27.6 billion worth of Canadian goods beginning August 22.

The Canadian measures are concentrated in sectors including steel and aluminum, dairy products, appliances, agricultural equipment, pulp and paper, plastics and electronics. Existing tariffs on some steel and aluminum products have also risen from 25 to 50 per cent to match U.S. rates, while earlier counter-tariffs on other products, including American automobiles, remain in place.

Carney defended the Canadian response while stressing that his government is not seeking escalation for its own sake. He said the measures are intended to protect Canadian workers, businesses and communities at a time when exporters are facing additional costs to sell their goods into the U.S. market.

The impact of the U.S. measures is not expected to be evenly distributed across Canada. Industries tied to steel, aluminum, automobiles and lumber have faced particular pressure, leaving workers and businesses in provinces including Ontario, Quebec and British Columbia more exposed to the effects of the trade dispute.

The latest escalation follows the suspension of Canada-U.S. trade negotiations last month. Ottawa said the concessions sought by Washington were neither fair nor economically sound and could have undermined Canadian workers, businesses and strategic sectors, prompting the government to halt the talks rather than accept the proposed terms.

Alongside the tariff measures, the federal government has announced C$7.5 billion in new and enhanced support for workers and businesses affected by U.S. tariffs. The package builds on nearly C$25 billion in assistance Ottawa says it has provided since the latest U.S. trade measures began.