President Donald Trump has announced the termination of trade negotiations with Canada, a move that could lead to increased prices for home appliances, cars, and auto parts. This decision follows a negative advertisement about U.S. tariffs aired by the Canadian province of Ontario earlier this month.

In a post on his social media platform, Trump stated, "TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A. Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED." The advertisement included audio from a 1987 speech by former President Ronald Reagan, who had imposed tariffs on Japanese products while warning about the potential long-term economic risks of high tariffs and trade wars.

Trump claimed, without providing evidence, that the ad was intended to influence an upcoming U.S. Supreme Court case regarding tariffs, which is scheduled for next month. In response, Ontario Premier Doug Ford emphasized the importance of cooperation between the two nations, stating, "Canada and the United States are friends, neighbours and allies. President Ronald Reagan knew that we are stronger together. God bless Canada and God bless the United States."

Currently, Canadian goods face a 35% tariff, although many exports remain duty-free under the United States-Mexico-Canada Agreement (USMCA). Certain Canadian products, such as steel and aluminum, are subject to specific tariffs, including a 50% levy. Experts suggest that the halt in trade discussions could prolong these tariffs, which Canada had sought to reduce or eliminate.

Canada is the largest exporter of steel and aluminum to the U.S., and these materials are essential in various products, including home appliances and automobiles. Michael Sposi, an economics professor at Southern Methodist University, noted, "Trade talks could’ve resulted in the lowering of existing tariffs." Steel constitutes about 60% of a car's weight, according to the American Iron and Steel Institute. Increased tariffs on steel imports could lead to higher production costs for U.S. automakers, who may then raise prices for consumers.

Major home appliances, such as refrigerators and washing machines, also rely on steel, making them susceptible to price increases due to tariffs. In June, Trump had previously suspended talks over Canada’s proposed Digital Service Tax, which would have imposed a 3% levy on U.S. tech companies, but negotiations resumed after Canada dropped the tax plan.

Last year, the U.S. recorded a trade deficit of $63 billion with Canada, a slight decrease from the previous year. In comparison, the U.S. faced larger trade deficits with China and Mexico, amounting to $295 billion and $171 billion, respectively. Approximately three-quarters of Canadian exports are directed to the U.S., while Canadian goods account for about 11% of U.S. imports. Key Canadian exports include crude oil, natural gas, and motor vehicles, many of which remain tariff-free under the USMCA.

The USMCA is set for a joint review next year, providing an opportunity for both countries to amend the agreement. However, if Trump’s recent actions affect these negotiations, it could further impact the prices of imported products, including cars. Tyler Schipper, an economics professor at the University of St. Thomas, remarked, "The breakdown of these talks about current tariffs probably doesn’t bode well for those negotiations."