When Toronto Mayor Olivia Chow sat down with business leaders this month to talk through the fallout of the Canada-U.S. trade war, she was addressing a city that has spent much of 2026 absorbing shocks it did not create and cannot unilaterally fix. The meeting arrives amid the most volatile stretch of Canada-U.S. trade relations in decades: 50 percent U.S. tariffs on tens of billions of dollars of Canadian goods, a stalled renegotiation of the continental trade pact, and a president who has taken to renaming Lake Ontario “Lake America” on Truth Social. For Toronto’s business community — from manufacturers exposed to steel and aluminum duties to a cultural sector watching the Toronto International Film Festival unfold under the shadow of an escalating dispute — the mayor’s outreach is less a solution than an acknowledgment that City Hall has limited tools against a fight being fought, and lost or won, in Ottawa and Washington.
A Trade War That Keeps Escalating
The dispute has moved well past rhetoric. According to CTV News, U.S. tariffs of 50 percent took effect on an estimated $28 billion worth of Canadian goods after the Aug. 19, 2026 deadline passed without a deal, prompting Ottawa to respond with dollar-for-dollar counter-tariffs on hundreds of American products. Government officials told reporters the retaliatory list was built to “match the U.S. rate for the same goods” — steel and aluminum tariffs rising from 25 to 50 percent, alongside new levies on furniture and clothing. Reporting from News4JAX, describing the atmosphere at TIFF weeks later, put the scale of the initial U.S. action at 50 percent tariffs on $20 billion worth of Canadian goods, with Canada’s retaliatory tariffs covering an equivalent $20 billion in American goods including steel, dairy products, appliances and farm equipment. The discrepancy between the figures cited by different outlets reflects how fluid and fast-moving the tariff lists have been — but the direction is unambiguous: both sides have been ratcheting up, not down.
The White House, in a statement titled “President Trump Is Finally Ending Canada’s Free Ride,” accused Canada of a “record of abuse” including restrictions on American wine, beer and spirits and its treatment of U.S. aerospace manufacturer Gulfstream. Prime Minister Mark Carney countered that Washington’s “last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.” Trump, for his part, told CNN’s Jim Sciutto he didn’t deny adding new conditions at the eleventh hour: “That sounds like me,” he said, adding Canada would have to “pay a fair amount” or there would be no deal.
Ottawa’s Response: Money, Deregulation and a Pitch to the World
The federal government’s counter-strategy has three visible prongs. First, cash: Finance Minister François-Philippe Champagne, speaking to the Edmonton Chamber of Commerce, pointed to a $7.5 billion package meant to “provide liquidity quickly to small and medium-sized businesses” and support affected workers, framing Canada as being in a “strong fiscal position” to weather the storm. Second, deregulation: the Carney government announced it is scaling back the Trudeau-era federal environmental review process for major energy projects, shifting responsibility to the Canada Energy Regulator alone — a move the government’s own regulatory impact analysis said industry stakeholders strongly supported as a path to “regulatory certainty” and fewer duplicated approvals. Third, diversification: Carney has been courting global investors directly, according to reporting picked up by WJTV, as the government pursues what it has described as a goal of $1 trillion in new investment over the next five years, with Carney set to lead a Canada Investment Summit in Toronto. Champagne put the pitch bluntly: “The world energy architecture is changing, and in that new world … Canada can be at the centre. Why? Because we provide stability, predictability, and trust.”
Where the Talks Keep Breaking Down
Beneath the big numbers, the negotiations have stalled on a handful of specific, politically loaded irritants. CTV News reported that as of mid-August, American negotiators showed no interest in softwood lumber relief, treating it as a long-standing dispute outside the scope of current talks, while insisting that American alcohol return to Canadian store shelves “immediately” once any deal is signed — a demand officials called “absolute top of mind” for the U.S. side. Eight of Canada’s ten provinces, excluding Alberta and Saskatchewan, pulled American booze from shelves in response to the tariff threats. British Columbia Premier David Eby has flatly rejected reinstating it, telling reporters there is “not a chance in hell,” and arguing that lumber — not liquor — deserves priority: “The softwood lumber sector is bigger than auto parts and steel combined in terms of the Canadian economy, and it needs to be front and centre at the table.”
Candace Laing, president and CEO of the Canadian Chamber of Commerce and a member of the prime minister’s trade advisory committee, told CTV News both sides remain “quite far apart in finding that landing zone to the resolution of each party’s priority grievances,” and that no extension to the tariff deadline had even been discussed. Separately, Canada-U.S. Trade Minister Dominic LeBlanc has pushed to renew the broader continental trade agreement for another 16 years, writing to U.S. Trade Representative Jamieson Greer and Mexico’s Marcelo Ebrard that the pact is “highly beneficial to each of our countries and to the integrated North American economy.” Greer has given no clear signal Washington wants a full renewal rather than a narrower review.
Winners, Losers, and Political Pressure on Both Sides
The pain is not confined to one side of the border. Five U.S. Democratic senators — Jeanne Shaheen, Chris Coons, Patty Murray, Amy Klobuchar and Elissa Slotkin — issued a joint statement saying Trump’s tariffs have already cost American families as much as $5,000 in some states and warned the trade war would only push that figure higher, calling on congressional Republicans to intervene. California Governor Gavin Newsom told CTV News he believes Trump will reverse course within “a matter of days, if not weeks,” under mounting pressure from within his own party, though Newsom conceded the damage to the relationship “may be more long-lasting than I had originally believed.”
In Canada, the domestic political response has split along familiar lines. Carney has stressed a “Team Canada” approach in calls with opposition leaders; Conservative Leader Pierre Poilievre said he would work with the government to respond to what he called Trump’s “unjustified” tariffs, even as he separately criticized LeBlanc for repeated trips to Washington that “come back empty-handed.” NDP Leader Avi Lewis has pushed Carney to go further, urging the government to “Trump-proof” the economy and welcoming the relief measures as only a “first step” for workers and industries caught in the crossfire. Energy proponents in Alberta appear to be among the clearer near-term beneficiaries of Ottawa’s response, given the streamlined pipeline approvals; lumber producers, wine and spirits retailers, and small and medium-sized exporters reliant on tariff-free access to the U.S. market look more exposed, at least until a deal — if one comes — resolves the specific irritants still on the table.
Toronto’s Cultural and Business Class Feels It Directly
Nowhere was the tension more visible than at this year’s Toronto International Film Festival, held on the shores of a lake the U.S. president has tried to rename. TIFF chief executive Cameron Bailey opened the festival by pointedly telling the crowd, “Welcome to TIFF and welcome to the beautiful shore of — say it with me — Lake Ontario.” Mayor Chow used her own remarks at the festival to draw a line between the disability-rights film being screened and the broader political moment, saying it “shows us that when people come together and stay tenacious, they can move mountains — even against the might of the U.S. government.” Filmmaker Michael Dowse, whose Canadian stunt-driving film premiered at the festival, captured the ambivalence many in Toronto’s business and cultural circles seem to share: “I love Americans and this whole trade war feels like bravado on roids. I hope they figure out a deal because we are better friends than enemies.” That sentiment is echoed in the city’s own municipal politics — with the Oct. 26 mayoral election approaching, at least one candidate responded to Trump’s Lake America order by proposing, in kind, to rename New York state “the province of New York,” a jab that underlines how thoroughly the trade dispute has bled into everyday civic life in a city whose economy is deeply intertwined with its southern neighbour.
Our Take
In our view, the mayor’s meeting with business leaders is best understood as a symptom of how little control any single Canadian city — even one as economically significant as Toronto — actually has over the forces battering its business community. The real leverage sits with Ottawa’s fiscal firepower, Washington’s tariff pen, and a negotiating table where, by the Canadian Chamber of Commerce’s own account, the two sides remain far from a landing zone. Champagne’s talk of a “golden opportunity” and Carney’s global investment pitch are genuine attempts to hedge against U.S. dependence, but a $1 trillion five-year investment target and a $7.5 billion liquidity package are relief valves, not a resolution — they buy time and cushion the blow rather than end the standoff. The stuck points that CTV News has documented — lumber, alcohol, autos, supply management — are exactly the kind of politically entrenched irritants that tend to outlast any single deadline, which is why Newsom’s prediction of a quick reversal should be read as one governor’s optimism rather than a settled outcome. For Toronto’s businesses, that likely means continuing to operate under uncertainty rather than clarity: hedging supply chains, absorbing costs on both sides of newly tariffed goods, and leaning on federal support programs whose durability depends on a fiscal position Ottawa insists is strong but that no one can guarantee will remain so if the standoff drags into another year. The mayor can convene the room; she cannot close the deal.
This is a Commentary piece: analysis and editorial perspective from Canadian Business News, clearly distinguished above from the reported facts it’s based on. It is not financial, investment, or legal advice.
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