Morning. U.S. President Donald Trump is intensifying his trade war with Canada, banning imports of the country’s alcohol, motorcycles and some dairy products. Today, we look at how Canadian businesses and political leaders are navigating a widening rupture with the country’s largest trading partner.
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In the news
Transportation: Porter and Transat have secured bailout loans to cope with soaring jet-fuel costs.
Investing: Bank of Montreal becomes the first Big Five bank to eliminate most online trading commissions.
Energy: Greg Ebel is retiring as chief executive officer of Enbridge Inc.
Bombardier jets like this are made primarily in Canada, but also in facilities across the U.S.Armando Franca/The Associated Press
In focus
Please return your elbows to their upright positions
Hours after Canada’s retaliatory tariffs on $28-billion worth of U.S. products took effect, Donald Trump hit back with outright bans on several Canadian products and tariffs of 50 per cent on a broader range of goods.
Here’s what we know about the new measures, most of which are set to begin on Sept. 29.
The bans: Products on the no-go list include beer, rye whisky, wine, whey protein, molasses, motorcycles and mopeds, The Globe’s Mark Rendell, Adrian Morrow and Nathan VanderKlippe report.
Also yesterday, Trump ordered the General Services Administration to remove Canadian-made goods from a contracting program that does more than US$50-billion in business annually, unless Canada offers what he called “full and fair reciprocity” to American companies. It wasn’t immediately clear how much of that business goes to Canadian suppliers.
The tariffs: New levies are set to be imposed on cheese, motorboats, paper, aluminum products, furniture and lamps. Trump removed tariffs from a smaller group that includes cement, toilet paper and certain electronics.
A painful cycle: The measures deepen the loop of retaliation after the collapse of trade negotiations and further restrict Canadian access to the country’s largest export market. They also reinforce the likelihood of a prolonged standoff, adding urgency to businesses’ efforts to find new customers, redirect goods and reduce their reliance on the United States.
The long road ahead: In remarks yesterday to right-wing outlet Breitbart News, U.S. Commerce Secretary Scott Bessent said Canadians should be careful, accusing them of seeking the benefits of being a state without being a state.
“Now that the arrangements may be splintering, everyone’s going to be coming to our side,” Bessent said.
Time will tell whether companies, investors and trading partners will choose the U.S. over Canada, but the mere fact that the White House appears to believe countries and businesses must eventually pick a side is cause for concern.
In that light, Canada’s retaliatory tariffs have become an early test case for countries grappling with a more transactional U.S. The outcome will be closely watched by allies seeking to gauge how much leverage Washington is willing to exert, how much resistance it will tolerate and how long Canada can withstand the pressure.
But it’s not as though we’re all sitting on our hands. (For one thing, that would make it difficult to lift our elbows.) Canadian leaders across politics, banking and manufacturing appear to be plotting a new course.
Bucking up: Federal cabinet minsters will fan out in the days ahead to reassure companies of the support they can access during the escalating trade war, Steven Chase reports.
Industry Minister Mélanie Joly and Finance Minister François-Philippe Champagne will be among the cabinet members meeting with businesses and local chambers of commerce across the country.
In the absence of formal talks with Washington, Prime Mark Carney’s focus will turn to attracting foreign investment. Next week, Carney is set to host an increasingly high-stakes investment summit in Toronto before travelling to Strasbourg, France, where he will aim to build alliances with European countries by attending the EU State of the Union and addressing the European Parliament.
Banking on Canadian tech: Ahead of the summit, Royal Bank of Canada is launching a $1.4-billion fund aimed at investing in Canadian technology companies that the lender believes could grow into “global powerhouses.”
Canada’s largest lender said the “RBCx Growth Fund” will focus on sectors where it believes the country’s greatest strengths lie to help stem the exodus of Canadian entrepreneurs seeking success in other markets.
RBC chief executive officer Dave McKay told The Globe’s Stefanie Marotta that he plans to pitch foreign investors at the Canada Investment Summit, which is part of Ottawa’s efforts to bolster its nation-building ambitions and diversify trade and global partnerships away from the U.S.
Canada is “just not scaling these companies that we need to form the next great multinational corporations in this country,” McKay said.
Bank of Nova Scotia, meanwhile, has laid the groundwork to issue bonds that would finance defence-related investments.
The bank’s Canadian defence issuance framework adds to the ways in which Canada’s financial sector is aiming to support Ottawa’s domestic defence ambitions, Pippa Norman writes.
Bombardier blues: On Tuesday, the first trading day since Donald Trump threatened a ban on the Quebec plane maker’s jets in the United States, investors initially made for the exit signs. Most of the stock’s early losses in the day were recovered – perhaps because it wasn’t clear how, exactly, Trump would stop Bombardier from exporting into the U.S. – but the investor whiplash shows how vulnerable the company is to a political fight beyond its control.
The stakes are massive for Bombardier, which sells more than half of its production volume into the U.S. market, Nicolas Van Praet writes.
Out west: In British Columbia, Premier David Eby said the province will expand a campaign encouraging people to support local goods and services. Eby said the province will erect signs at border crossings that read: “Welcome to British Columbia, Canada. Strong, proud and will NEVER be the 51st state. Sorry!” Hopefully the sign makers aren’t charging by the letter.
In Alberta: Premier Danielle Smith cautioned against further escalation in the trade fight with the U.S. and urged diplomacy.
Dropping provincial “Buy Canadian” policies was one of the Trump administration’s demands in talks that collapsed last month.
“I strongly encourage all of Canada’s leaders to double down on diplomatic efforts by speaking directly with the American people, congressional leaders, governors, and other lawmakers, about the benefits of fair and free trade between Canada and the United States,” Smith said in a statement.
In Manitoba: Premier Wab Kinew and federal Northern Affairs Minister Rebecca Chartrand said they’re standing for Team Canada and Bombardier – “or, as we say here in Manitoba, Bom-bar-deer,” Kinew said.
Out east: Nova Scotia Premier Tim Houston said his government is in talks with businesses bracing for effects of the trade war, which he worries could continue for as long as Trump remains in power.
“I believe there is a risk that the situation could be there as long as Donald Trump is there,” Houston told reporters yesterday.
That’s probably true, and possibly why broadening Canada’s economic relationships may be its best hope against a U.S. that increasingly expects other countries to pick a side.
Charted
Class conflict: Statistics from several school boards and governments across the country suggest a troubling rise in violence against teachers.
Quoted
It was such a wonderful but overwhelmingly saturated decade of passion and pain, and obviously music, but addiction and death – a zeitgeist moment in our generation and the end of a millennium.
In her new photo exhibition at the Art Gallery of Ontario, Melissa Auf der Maur captures a nostalgia for the style and energy of 1990s music culture.
Morning update
Global markets lost ground ahead of U.S. CPI data later this week, with Brent crude hitting the key US$100-per-barrel level as renewed tensions in the Middle East fanned inflation worries and curbed risk appetite.
Wall Street futures were in the red, while TSX futures followed sentiment lower.
Overseas, the pan-European STOXX 600 was down 1.08 per cent in morning trading. Britain’s FTSE 100 fell 0.68 per cent, Germany’s DAX dropped 1.21 per cent and France’s CAC 40 declined 1.41 per cent.
In Asia, Japan’s Nikkei closed 0.19 per cent lower, while Hong Kong’s Hang Seng slipped 0.17 per cent.
The Canadian dollar traded at 72.53 U.S. cents.
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