Danielle Smith Breaks With Ford’s Tariff Fight, Warns Canadians Will Pay the Price

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Canada’s trade-war consensus is starting to show stress. Ontario Premier Doug Ford is urging Ottawa to answer new U.S. tariffs with equal force and has even proposed targeting imports from politically important states that helped power Donald Trump’s coalition. Alberta Premier Danielle Smith is taking a different line. She says Canadians should not celebrate counter-tariffs that can raise the cost of machinery, food production and other essentials, and she wants negotiations restarted as quickly as possible.

The disagreement is not simply about tone. It reflects two competing ideas about how Canada should respond when its largest trading partner applies economic pressure: impose enough pain to force Washington back to the table, or limit retaliation because some of that pain inevitably lands on Canadian households and businesses.

Smith Rejects the Idea That Retaliation Is a Victory

Smith’s message stood out because most premiers rallied around Prime Minister Mark Carney after trade talks collapsed. She said no one benefits from a trade war and warned that tariffs and counter-tariffs hurt workers, businesses and families on both sides of the border. On an Alberta call-in program, she made the argument more tangible by pointing to farmers and the equipment they need to produce food. Her point was that a retaliatory tariff can be aimed at the United States while still showing up as a higher cost in Canada.

That puts Smith at odds with the tougher language coming from Ford, Manitoba Premier Wab Kinew and British Columbia Premier David Eby. But it does not mean she endorsed Washington’s tariffs. Smith described the failure to reach a deal as deeply disappointing and said Alberta would keep advocating for a tariff-free relationship. The distinction is central: she is criticizing the method of retaliation, not arguing that the U.S. measures are harmless or justified.

Ford Wants Canada’s Response to Create Political Pressure

Ford has argued that Canada should make retaliation politically painful, not merely symmetrical. In an August 17 letter to Carney, the Ontario premier urged a dollar-for-dollar response and recommended tariffs on imports from states he described as politically significant to the Trump administration’s base. The states he named included Alabama, Arkansas, Florida, Iowa, Missouri, Montana, Texas and Wisconsin. His theory is straightforward: if tariffs create pressure on businesses and voters in strategically important states, that pressure may eventually travel back to Washington.

Ford has also said energy, electricity and critical-mineral infrastructure should remain part of Canada’s negotiating leverage. After the talks collapsed, he gave Carney his “full support” and repeated his tariff-for-tariff position, arguing that the proposed U.S. deal would have been damaging to Ontario’s auto, steel and manufacturing sectors. His state-targeting idea remains a provincial recommendation, however. Ottawa has not yet published the final product-by-product list for the counter-tariffs scheduled to begin September 8.

Carney Is Retaliating — While Admitting It Will Cost Canadians

Carney’s position sits closer to Ford’s on retaliation, but his own explanation also validates part of Smith’s warning. The federal government says it will match the new U.S. tariffs dollar for dollar, with measures concentrated in areas including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. The counter-tariffs are scheduled to take effect September 8, after Labour Day, with detailed product lists still to come.

At the same time, Carney acknowledged that the policy will raise costs and reduce choice for Canadians. That admission matters because tariffs are collected from importers at the border, not paid directly by a foreign government. Importers can absorb some of the charge, demand lower prices from suppliers, switch sourcing, or pass part of the extra cost to buyers. Canada is therefore making a deliberate trade-off: accept some domestic cost in exchange for defending Canadian industries and increasing pressure on the United States. Smith’s argument is that the domestic side of that trade-off deserves more attention.

Canada Already Has Evidence That Tariffs Reach Store Shelves

There is recent Canadian evidence showing that counter-tariffs can reach store shelves. Bank of Canada researchers examined more than 110,000 online products sold by seven major retailers during the 2025 tariff episode. They found that goods subject to Canada’s 25% counter-tariffs rose about 6% more in price than comparable untariffed products by mid-June. In other words, roughly one-quarter of the tariff was passed through to retail prices during that period.

The researchers estimated that those counter-tariffs added about 0.3 percentage points to consumer-price inflation. They also found that prices moved back toward pre-tariff relationships after most of the duties were removed, suggesting that tariff-related price increases do not necessarily become permanent. Earlier Bank research on the 2018 dispute found higher average pass-through over a longer horizon. The lesson is not that every 50% tariff produces a 50% retail increase. It is that some portion can reach consumers, especially when businesses expect the policy to last.

Farm Equipment Makes Smith’s Warning Easier to Understand

Agricultural equipment is where Smith’s warning becomes especially concrete. Carney specifically listed agricultural equipment among the sectors Canada intends to target, although the government has not yet released the detailed tariff schedule. Smith cautioned against celebrating a response that could leave farmers paying sharply more for machinery caught by the measures. For a farm already delaying a tractor, combine or implement purchase, another layer of cost can change an investment decision quickly.

Farm Credit Canada had already identified equipment affordability as a problem before this latest escalation. Its 2026 outlook said new equipment sales had weakened as lower crop prices and rising operating costs squeezed farm profitability. Canadian agricultural implement manufacturing sales were down 18% through the first nine months of 2025, while new orders were down 16%. FCC also noted that tariffs on steel and aluminum had raised manufacturers’ input costs. That backdrop helps explain why Smith chose farm machinery as her example: producers are entering the dispute with limited room for another cost shock.

Ontario and Alberta Are Looking at Different Economic Risks

The Ford-Smith split also reflects the different economic structures they govern. Ontario is deeply tied to U.S. manufacturing supply chains. Provincial data show that the United States took 77.2% of Ontario’s merchandise exports in 2024, worth $194.9 billion. Motor vehicles and parts alone accounted for $65 billion, or roughly one-third of those U.S.-bound exports. That makes auto tariff rules, steel costs and cross-border parts flows immediate political issues in Ontario communities built around manufacturing.

Alberta is also heavily dependent on the U.S. market, but the composition is different. Alberta government trade data put exports to the United States at $151.5 billion in 2025, with energy forming the backbone of the relationship. Agriculture is another major cross-border link: federal data show Alberta-U.S. agriculture and agri-food trade totaled about US$9 billion in 2024. Ford therefore sees retaliation through the lens of factories and industrial leverage, while Smith sees the risk of disrupting energy, agriculture and imported inputs. Both provinces are exposed, but not in the same way.

The New U.S. Tariffs Are Narrower Than a Blanket Tariff — but Extremely Steep

The new U.S. action is severe in rate even though it does not cover all Canadian exports. Ottawa says the 50% tariffs apply to roughly C$28 billion worth of Canadian goods. The U.S. Trade Representative described the affected trade as nearly US$20 billion, a currency difference that helps explain the two headline figures. The measures were imposed under Section 338 of the U.S. Tariff Act of 1930, a rarely used provision that allows duties of up to 50% in response to alleged discrimination against U.S. commerce.

Affected products range from hockey equipment, clothing and cement to alcohol and dairy-related goods, while other sectors remain governed by separate tariff actions. The Canadian Federation of Independent Business warned before implementation that two in five small exporters it polled sold products exposed to the new duties, and 35% of affected firms expected revenue to fall by at least half. That is why the fight cannot be reduced to premiers trading slogans: small exporters may face an immediate loss of U.S. demand while Canadian counter-tariffs raise selected import costs at home.

The Breakdown of the Deal Explains Ford’s Harder Line

The collapse of the negotiations helps explain why Ford is willing to tolerate the cost of retaliation. Carney said Canada had been prepared to reduce its remaining counter-tariffs if Washington substantially lowered duties on strategic sectors. But he said the U.S. introduced late demands that would have restricted Canada’s ability to make trade deals with other countries, weakened protections involving language and culture, and left important categories of Canadian-built trucks outside meaningful tariff relief.

The vehicle issue was particularly relevant to Ontario. Carney said proposed U.S. terms would have excluded medium and heavy vehicles and certain light trucks from improved treatment, citing Ford’s planned F-series production in Oakville and GM Silverado production in Oshawa as examples. Washington disputes Canada’s account of who caused the breakdown. U.S. Trade Representative Jamieson Greer said Canada introduced new demands and reversed earlier commitments. The competing narratives matter, but they agree on one point: the talks failed after both sides believed an agreement had been close.

Team Canada Is United Against U.S. Tariffs, but Not on How to Fight Back

For now, Smith is the clearest provincial voice warning against treating retaliation itself as a victory. Ford called for all premiers to remain united and said there could not be an “outlier.” Eby said British Columbians would keep fighting, Kinew argued Canada should not appease Trump, and several Atlantic premiers publicly backed Carney’s stance. Quebec Premier Christine Fréchette emphasized the scale of the hit to her province, saying the new 50% tariffs affect $7.7 billion in Quebec goods on top of existing pressure on steel, aluminum, lumber and copper.

Yet the disagreement should not be overstated into a complete collapse of Team Canada. Smith’s stated goal is still a tariff-free Canada-U.S. relationship, and her first concern is the livelihoods put at risk by the conflict. The divide is over strategy and tolerance for collateral damage. Ford believes an aggressive response is needed to create leverage. Smith argues that Ottawa should remember who writes the cheque when Canadian tariffs are collected. That debate will intensify once the federal government releases the exact list of products it plans to target.

The Bigger Fight Is Now About the Future of CUSMA

The larger issue is what this confrontation does to CUSMA. The agreement did not expire at its July 2026 joint review. Its text keeps it in force until 2036 unless a country withdraws earlier, but because the parties did not all agree to a new 16-year extension, the pact now moves into annual reviews. The U.S. Trade Representative publicly celebrated Trump’s decision not to “rubber stamp” an extension, while Canada continues to describe CUSMA as the cornerstone of North American trade.

That makes the Ford-Smith disagreement more than a one-week argument over tariffs. Canada must decide how much economic pain it is willing to absorb to preserve negotiating leverage during a potentially long period of annual trade friction. Ford’s approach assumes pressure must be answered with pressure, especially when strategic industries are at risk. Smith’s approach assumes every additional barrier can weaken the same integrated market Canada ultimately wants to preserve. The next test comes before September 8: whether renewed talks can narrow the dispute before Canadian counter-tariffs begin raising costs at home.

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