The US-Canada trade talks have broken down into an open trade war, and that is bad news for American drivers, factories, and anyone worried about inflation.

• Canada supplies most of America's imported oil, natural gas, and electricity, and it is now willing to send that energy elsewhere.
• Gas prices are already back above $4 a gallon, nearly a dollar higher than a year ago, with oil climbing toward $100 on the Iran conflict.
• Washington slapped 50% tariffs on Canadian goods; Canada hit back on US steel, dairy, appliances, and farm equipment.
• US refineries in the Midwest and Rockies are built around Canadian crude, so losing it would damage the system, not just raise prices.
• Bond yields are pushing higher as investors price in more inflation, and Treasury's attempts to calm the market keep failing.

Outlook: Unless Trump backs down, expect higher gas prices, higher interest rates, and more pressure on both the bond market and American manufacturers.