US-Canada trade war escalates as China resists Iran sanctions
Washington is fighting Canada, China, and Iran at once, and the strain is showing up in the bond market — bad news for US exporters, borrowers, and anyone holding dollars.
- Canada is matching US tariffs dollar for dollar, hitting billions of American imports with duties of up to 50% starting in September.
- A planned 50% US tariff on Canadian oil, metals, and machinery would push up costs for American factories, data centers, and farmers.
- US steel already costs three times the global average, so Canadian buyers are likely to switch to cheaper Chinese supply.
- China is refusing to stop buying Iranian oil and hinting it could cut off rare earth exports, which would hit carmakers, defense, and AI chips.
- Treasury bond buybacks are being used to hold down borrowing costs, but the deficit, hot inflation, and shrinking foreign demand for US debt are unchanged.
Outlook: If the buyback push fails, pressure builds for the Fed to step in and print, which would weaken the dollar further.