Trump escalates trade war with Canada following Palestine stance

Trump is set to impose a 35% tariff on all Canadian goods not covered by the U.S.-Mexico-Canada trade agreement if the two countries do not reach an agreement by the deadline.

"Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them," Trump said on Truth Social.

Canadian Prime Minister Mark Carney previously said tariff negotiations with Washington had been constructive, but the talks may not conclude by the deadline. Talks between the two countries were at an intense phase, he added, but a deal that would remove all U.S. tariffs was unlikely.

Canada is the second-largest U.S. trading partner after Mexico, and the largest buyer of U.S. exports. It bought $349.4 billion of U.S. goods last year and exported $412.7 billion to the U.S., according to U.S. Census Bureau data.

Canada is also the top supplier of steel and aluminum to the United States, and faces tariffs on both metals as well as on vehicle exports.

Last month, Carney's government scrapped a planned digital services tax targeting U.S. technology firms after Trump abruptly called off trade talks saying the tax was a "blatant attack."

Carney followed France and Britain as he said on Wednesday that his country was planning to recognize the State of Palestine at a meeting of the United Nations in September.

In announcing the decision, Carney spoke of the reality on the ground, including starvation in Gaza.

"Canada condemns the fact that the Israeli government has allowed a catastrophe to unfold in Gaza," he said.

Israel and the United States, Israel's closest ally, both rejected Carney's comments.

Carney's office did not immediately respond to a request for comment on Trump's post.