Photo Credit: Darren Calabrese/Reuters via Council on Foreign Relations
On Aug. 22, Prime Minister Mark Carney walked away from trade negotiations with the US, stating that they “asked for too much and offered too little.”
The impact of this on Canadians is significant. To begin with, the lack of a trade deal with the US will lead to higher consumer prices for everyday goods and manufactured products. This is because Canada will retaliate against the US with tariffs on goods imported from the US, and since Canada imports a large amount of goods from the US, Canadians will have to pay more for everyday essentials.
Moreover, due to the increased prices, some businesses may be forced to cut jobs. University of Calgary economist Trevor Tombe estimates that over 90,000 Canadians could lose their jobs due to the trade war, according to CBC News.
Additionally, according to BBC News, the decision to refuse a deal with the US would mean having to pay higher prices while Ottawa pushes for more concessions from the Americans. Carney is trying to convince Canadians that taking a stand against the Trump administration is worth this period of hardship.
The breakdown in trade deal talks has also had economic repercussions for the US. Fewer Canadians are choosing to visit America, which caused the US to lose approximately $3.3 billion in travel revenue last year.
According to CBC News, the Trump administration introduced new demands on Canadians shortly before the trade talks were set to wrap up.
“The US introduced, in the last hours, efforts to restrict our ability to have other trade deals," Carney said, according to CityNews. He added that the effort to squeeze additional concessions into the deal at the last minute derailed months of prior negotiation.
The relationship between Canada and the US soured in 2025, when US President Donald Trump imposed 25 per cent tariffs on most Canadian imports. In response, the prime minister at that time, Justin Trudeau, retaliated with additional tariffs, sparking a trade war.
This was the beginning of the souring Canada–US relations, and it dealt a heavy blow to the US’ reputation.
As recounted by CBC News, a senior Trump administration official told The New York Times that “American foreign policy might be summed up by the idea that ‘people can no longer take the United States for granted.’” Canada can no longer take the US for granted, or depend on it to stand by its traditional allies and respect trade agreements.
Carney said that it was as if the US was signing trade agreements in pencil, meaning that they lack permanence and try to avoid legal bindings that may impact them in the future.
As The Conversation states, due to various factors, the US is Canada’s largest trading partner; however, Canada has alternatives.
According to The Conversation, “The Trans Mountain expansion helped increase the non-US share of Canadian crude exports to 10.9 per cent in 2025, while LNG Canada’s Kitimat terminal now provides direct access to East Asian markets. These routes cannot replace the US market, but they make diversification — and Canada’s walkaway option — more credible.”