Canada is preparing retaliatory tariffs on U.S. goods following the collapse of trade talks, with Prime Minister Justin Trudeau vowing to match U.S. levies dollar for dollar. The move, set to take effect Sept. 8, targets steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Ontario Premier Doug Ford has urged using electricity, energy, and critical minerals as leverage, focusing on Trump-base states like Michigan and Pennsylvania.

The escalation raises fears of a prolonged trade war that could raise prices for American consumers on goods like winter jackets and plywood, hurting President Biden’s already weak economic polling. Nvidia’s reported $30 billion investment in AI startup Perplexity adds to market volatility, while California’s attorney general canceled talks with Paramount over a Warner Bros. Discovery deal, citing bad faith.

The situation reflects deepening rifts in the Trump administration, with Commerce Secretary Howard Lutnick increasingly involved in trade negotiations. Markets remain volatile as Fed Chair Jerome Powell prepares to speak on interest rates and bond buybacks.