The Latest: Canada’s prime minister promises retaliatory tariffs as negotiations with the US falter

President Donald Trump’s 50% tariffs on scores of Canadian imports kicked in Saturday. The new taxes will raise prices for American companies and consumers on about 5% of Canada’s annual exports to the U.S., roughly $20 billion in goods ranging from agricultural products to hockey sticks. Prime Minister Mark Carney quickly promised Saturday that Canada will impose retaliatory measures “dollar for dollar” starting Sept. 8.

Iran's Foreign Ministry spokesperson warned on Monday that Tehran would respond harshly to expanded U.S. sanctions, after the new head of Iran’s top security body warned that Tehran will see any country’s support for new U.S. economic measures against the Islamic Republic as an “act of war.”

The Latest:

House Democratic leader Hakeem Jeffries and President Trump’s son-in-law and outside adviser Jared Kushner met privately recently in New York, a signal that the White House is seeking ways to work with Democrats if they wrest majority control from Republicans in the midterm elections .

The meeting, first reported Sunday by The New York Times, touched on issues ranging from housing, immigration to the high cost of living. People in the United States are struggling under inflationary prices that Democrats blame on Republicans, alongside Trump, for failing to get under control.

Kushner suggested that Jeffries, who is in line to become House speaker if Democrats regain power in November, meet with White House chief of staff Susie Wiles as a follow-up.

Jeffries, in a statement Sunday, did not mention the private conversation but said the Republican administration needed to drop the GOP’s “my-way-or-the-highway” approach that “has failed the American people.”

“To stop the madness, we have repeatedly made clear that an extremist approach will not work and will be met with forceful opposition,” the New York congressman said. “The question is whether Republicans will join us.”

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Iran’s currency hit a record low Monday as Washington prepared to announce new sanctions it said would add further pressure on an economy already battered by previous sanctions and a U.S. naval blockade.

The rial dropped to 2.02 million to the U.S. dollar as trading opened on currency markets. Iran’s official Central Bank rate stood at around 1.5 million rial to the dollar, but the market rate is what most Iranians pay.

The currency had already been under pressure before the U.S. and Israel attacked Iran on Feb. 28 , as Iran faced double-digit inflation and negative growth, but has repeatedly hit new lows as nearly six months of war have taken an even greater toll.

Iranians find daily staples increasingly unaffordable. Since the war began, rice is up some 60% and prices of beef are more than 150% higher. The International Monetary Fund forecasts that GDP will contract more than 5%.

Still, economic pressure has not yet translated into political pressure.

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Canada’s Carney has announced the tariffs against the U.S. would begin Sept. 8, noting they would target steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.

The prime minister said Canada was willing to drop remaining retaliatory tariffs on steel, aluminum and autos if the U.S. substantially lowered its own, and to encourage provinces to restore U.S. alcohol sales. But eventually, he said Washington’s final demands went too far.

Carney accused Washington of using “economic integration as a weapon,” and that Canada had been “attacked” by the latest U.S. tariffs. He said his country had the reserves and resilience to respond.

Trump’s top trade negotiator, Jamieson Greer, pledged additional measures to respond to Canada’s retaliation — without immediately specifying what that would look like. In a Saturday interview with “Fox & Friends Weekend,” Greer also claimed the administration offered to cut tariffs on steel, autos and lumber, but Canada “didn’t want” the deal.

A Canadian flag flies on Parliament Hill in Ottawa on Saturday, Aug. 22, 2026. (Patrick Doyle/The Canadian Press via AP)

The new levies are expected to affect about 5% of Canada’s annual exports to the U.S., roughly $20 billion in goods ranging from hockey sticks to agricultural products.

Canada sends the vast majority of its goods exports to the U.S. (72% last year), and Trump administration says the new taxes will be levied on products ranging from hockey sticks to wine and cement. The list is long. According to documents published by the White House, other goods subject to the tax include honey, seeds and agricultural products — as well as select makeup, perfumes, clothing, jewelry, furniture, cameras, fabric and more.

The 50% levy also applies to some products that were previously protected under the US-Mexico-Canada Agreement, a trade pact from Trump’s first term. That marks a shift from past levies — and further underlines questions around the future of the USMCA overall.

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Mark Carney drew international attention as Canada’s prime minister by warning that middle powers must resist economic coercion by more powerful countries. Now President Donald Trump is putting that warning to the test with sweeping new tariffs that could show how much economic pain Canada can absorb.

Tensions escalated late Friday when Canada walked away from negotiations after Carney concluded the United States was demanding too much in exchange for tariff relief. The U.S. imposed 50% duties Saturday on about $20 billion worth of Canadian goods, and Carney announced dollar-for-dollar retaliation beginning Sept. 8.

“We’re going to hit back,” Carney said.

Carney is doing what many other American allies have so far avoided: risking economic pain rather than yielding to tariff pressure.

For Carney, the showdown is the clearest test yet of his argument that middle powers must stand up to economic pressure from great powers such as the United States and China, even when it comes at a cost. Canada’s response could show how countries navigate a world in which long-standing alliances offer less protection and economic ties themselves become sources of leverage.

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