The United States has been ramping up tariffs on imported goods, igniting trade tensions not just with rivals but also with close allies. Recently, the US imposed a hefty 50% tariff on foreign steel and aluminum, aiming to boost domestic industries. However, this move has strained relations with Canada, the largest supplier of these materials to the US.
In response, Canada has taken countermeasures. After months of fruitless trade negotiations, US President Trump announced on July 10 a new 35% tariff on Canadian imports starting August 1. Feeling the pressure, Canada expanded its steel import quota restrictions and imposed surcharges on excess imports, effective July 16. Additionally, Canada will levy a 25% surcharge on steel products melted and poured in the Chinese mainland but imported from non-US countries.
These tit-for-tat tariffs are hurting economies on both sides. While the US aims to reduce its trade deficit and revive domestic manufacturing through “reciprocal tariffs,” the strategy is backfiring. Allies like Canada are bearing significant economic pain. Statistics Canada reported that the country’s GDP contracted by 0.1% in both April and May, with manufacturing activity plunging 1.9% in April—the sharpest decline since April 2021.
The trade tensions aren’t limited to Canada. The European Union, Japan, and other nations are also feeling the impact of US tariff policies. With the announcement of a 30% tariff on imports from Mexico and the EU effective August 1, these countries are coordinating to counter the US’s aggressive trade stance.
The ongoing tariff battles are proving to be a self-defeating conflict with no winners. Instead of advancing economic interests, these measures are driving up costs, straining international relationships, and causing economic slowdowns. Efforts by countries to comply or shift the crisis elsewhere have not yielded relief. For instance, Vietnam’s trade agreement with the US, which restricts trans-shipments in exchange for tariff reductions, and Canada’s surcharges on imports, have not secured concessions from the US or alleviated tariff pressures.
This escalating trade war underscores a fundamental truth: in such conflicts, there are no winners. All parties suffer from economic damage and strained relations. It’s a zero-sum game that ultimately hampers global economic growth and cooperation.
