Bilateral relations between the United States and Canada are experiencing one of their tensest moments in decades. An emblematic example is Trump's recent announcement (external link) renaming Lake Ontario, situated on the border between the two countries, to Lake America.
The move triggered an immediate reaction in Canada (external link). Prime Minister Mark Carney stated that the lake's historical name predates the existence of both countries. The change applies solely to official references within the United States, but can already be seen on major search engines (external link).
The episode is symbolic, yet it illustrates the deterioration of a relationship that was defined for decades by deep economic, military, and cultural integration. It also comes just days after the United States and Canada concluded a decisive round of trade negotiations without an agreement. On August 21, Washington began imposing additional 50% tariffs on roughly $20 billion worth of Canadian products (external link), hitting items such as beverages, sporting equipment, cement, apparel, and agricultural goods. These account for about 5% of the trade volume between the two nations.
The crisis promises to escalate further. Canada announced retaliatory tariffs of equivalent value on products including aluminum, furniture, seafood, and dairy, set to take effect on September 8. In addition, on January 1, 2027, U.S. tariffs on Canadian vehicles and auto parts are scheduled to rise to 50% (external link). Toyota and Honda, which manufacture over 75% of the vehicles produced in Canada, are among the companies potentially most affected.
The Reciprocity Justification
The U.S. administration argues that Canada (external link) benefits from access advantages to the U.S. market that are not reciprocal, undermining domestic American manufacturing across various sectors. The tariffs, however, have also been accompanied by attempts to advance other political interests and subject Washington's partners to trade terms more favorable to the United States.
The dynamics of agreements concluded with other countries (external link) also reveal a tendency by Washington to pursue deals marked by asymmetric gains, disproportionately favoring the U.S. over its partners. In this context, tariffs are used as leverage to extract economic and political concessions that serve American interests, especially the preservation of its global primacy.
Furthermore, the tariffs imposed on Canada are intended to benefit American agricultural producers. This could help bolster the president's approval ratings as the midterm elections draw near.
A Pre-existing Trade Dispute
This is not the first time the commercial relationship between the two countries has been strained by an attempt to revise trade terms. During his first term, Trump renegotiated NAFTA (North American Free Trade Agreement), the free trade pact between the U.S., Mexico, and Canada established in 1994. The treaty was replaced by the USMCA ( (external link)United States-Mexico-Canada Agreement (external link)) (external link).
In the new version, the United States sought to secure more favorable conditions for itself, clashing with the underlying logic of free trade agreements. Such treaties are generally designed to guarantee preferential treatment among member states, facilitating trade flows and seeking the progressive elimination of tariff and non-tariff barriers.
Subsequently, in February 2025, at the beginning of his second term, Trump mandated the imposition of 35% tariffs on imports from Canada. The justification offered at the time was that the country was not doing enough to halt cross-border drug trafficking. In addition, Washington levied targeted tariffs on key sectors of the Canadian economy, such as aluminum, steel, and automobiles. The primary target was the Canadian dairy industry (external link) and other agricultural goods.
The White House invoked Section 338 of the Tariff Act of 1930 (external link), a provision allowing the president to impose tariffs in response to what is deemed discriminatory or unequal treatment of American commerce. Created during the protectionist era of the American Great Depression (external link), this legislation had never been utilized in such a manner before, and its application raises legal challenges.
An Economic Relationship Hard to Replace
Canada is the United States' second-largest economic partner, and approximately 70% of its exports are bound for the U.S. market. In 2025, bilateral trade in goods and services totaled $879.9 billion (external link). Over that period, the U.S. exported $426 billion and imported $454 billion in Canadian goods, generating a trade surplus for Canada.
Canada is also the leading energy supplier to the United States. Despite the tariffs imposed since the onset of the current dispute, trade between the two countries posted a year-over-year increase (external link).
Moreover, this integration extends beyond commerce. The partnership is profound and encompasses security and cultural dimensions (external link). The two countries maintain long-standing military cooperation, including as members of the North Atlantic Treaty Organization (NATO).
The United States has been demanding preferential access to critical mineral development in Canada, which was rejected by the Canadian government. Critical minerals and rare earth elements are strategic resources utilized in sectors such as defense and technology. China dominates much of the processing and refining of many of these minerals, providing Beijing with substantial bargaining leverage amid fierce competition with the United States for global technological and economic leadership.
Canada and Mexico Seek Alternatives
According to Canadian Prime Minister Mark Carney, Washington offered very little while making excessive demands (external link) on Canada. In response, the country has sought to diversify its trade partners to reduce its dependence on the American market and enhance the resilience of its economy against U.S. tariff measures.
Prominent among these efforts is the resumption, since 2025, of negotiations for a free trade agreement with Mercosur (external link). In January, Canada also announced the negotiation of a deal with China (external link), an initiative that prompted Washington to threaten tariffs of up to 100% should the talks proceed.
Concurrently, Mexico is watching the deterioration of US-Canada relations with concern (external link). The country has also been facing pressure from Washington to renegotiate its trade terms. Currently, Mexican products are subject to tariffs of 50% on aluminum and 25% on automobiles and auto parts. The government of Claudia Sheinbaum has been attempting for about a year to negotiate a reduction in these tariffs, but the impasse between its two northern neighbors increases uncertainty surrounding the Mexican negotiations.
What is at stake, therefore, is the relationship model that will sustain the North American economy in the coming years. For now, there is no new round of negotiations officially scheduled. The Canadian government has signaled that it intends to preserve the USMCA, but is not willing to accept the new terms imposed by Washington. The dispute has become a test of how far the two neighbors are willing to alter a partnership that, until recently, seemed to be one of the most stable in the international system.
This article, “EUA e Canadá: de parceiros históricos a uma relação marcada por tarifas e disputas de soberania”, by Fernanda Brandão, was originally published in The Conversation and is licensed under Creative Commons (CC BY-ND 4.0).