OTTAWA — Canadian Prime Minister Mark Carney convened his cabinet in Banff, Alberta, on Thursday amid intensifying trade tensions with the United States, focusing on whether to escalate retaliatory tariffs and how to support sectors most affected by the ongoing dispute.

The latest round of tariffs began on Tuesday after Canada imposed levies ranging from 15 to 50 percent on $20 billion worth of American goods. This action was in response to President Donald Trump’s 50 percent tariffs on certain Canadian products announced earlier. Trump further escalated the conflict later that day by expanding his 50 percent tariff list and banning imports of several Canadian goods, including beer, wine, liquor, and three-wheeled motorcycles made by Quebec-based Bombardier Recreational Products (BRP).

Canada’s trade minister, Dominic LeBlanc, stated that the government was evaluating the impact of the latest American measures while reaffirming its commitment to protecting Canadian workers, farmers, families, and businesses against these “unjustified actions.” Public opinion polls indicate broad support across Canadian regions for Prime Minister Carney’s decision to respond with tariffs, with many Canadians advocating for even stronger measures, such as an export tax on electricity.

Despite this backing, Carney, an economist and former central banker, has voiced reservations about escalating the trade conflict. Prior to the most recent U.S. retaliation, he characterized escalation as “not constructive,” reflecting a more cautious approach compared to some political counterparts, including Ontario Premier Doug Ford, who has urged for more aggressive countermeasures.

Economic experts largely agree that Canada’s smaller economy cannot inflict significant damage on the United States and that retaliatory tariffs tend to raise costs for Canadian consumers. The cycle of reprisal has persisted since Trump took office, with each tariff prompting further retaliation.

Political analyst Andrew McDougall of the University of Toronto said Carney faces strong public pressure to maintain a firm stance. “Public opinion right now is so inflamed that anything that looks like a concession or a walk back means that he’s going to get destroyed in the public eye,” McDougall said.

The latest U.S. restrictions on Canadian goods include a ban on BRP’s three-wheeled motorcycles, seen as a response to Canada’s 50 percent tariff on American motorcycles, which jeopardizes Harley-Davidson’s Canadian market share. BRP spokesperson Emilie Proulx noted that the ban’s near-term impact would be limited, as most motorcycles sold in the current season had already shipped to American dealers.

Additional U.S. bans cover almost all types of Canadian alcoholic beverages, in reaction to several Canadian provinces removing American products from their government-controlled liquor stores. The tariffs also target whey, aluminum products, furniture, motorboats longer than 7.5 meters, certain paper products, mattresses, and golf carts. Meanwhile, the U.S. lifted tariffs on some goods, including tissue products, road salt, and fishing rods.

Economist Wendong Zhang of Cornell University, who models the economic effects of the tariffs, said Canada’s selective retaliation has done more harm to its own economy than restraint would have, though Canada avoided targeting major U.S. exports like butter. Zhang also noted the persistence of trade damage, citing alcohol sales in Saskatchewan and Alberta, which remain depressed by over 60 percent even after American products returned to shelves.

Despite the economic consequences, Zhang anticipates that Carney will pursue additional retaliatory measures, recognizing the political necessity to respond. “I understand that it’s politically suicidal to not have a reaction,” he commented.

As the trade standoff continues, Canada’s leadership is set to weigh the costs and benefits of further escalation against domestic political pressures and long-term economic fallout.