EXCLUSIVE: Donald Trump's Canada Tariffs Move Fuels Fresh Fears Over 'All-Out War'

The measures mark another escalation between Washington and Ottawa under Canadian Prime Minister Mark Carney, whose government has increasingly sought closer economic relationships outside the US.

Carney said Canada's retaliatory measures had become unavoidable, accusing Washington of seeking "dependency, not a true economic partnership."

He has sought to strengthen Canada's relationships with Europe and Asia as relations with its largest trading partner have deteriorated.

The dispute has also acquired an extraordinary security dimension.

Earlier this year, the Canadian Armed Forces modeled how Canada might respond to a hypothetical American invasion – believed to be the first such exercise involving the US in more than a century.

Officials stressed the scenario was conceptual rather than an operational military plan and that an American attack remained highly unlikely.

The modeling nevertheless envisaged US forces entering from the south and rapidly attempting to seize strategic positions.

Because Canada lacks the personnel and equipment required to repel the vastly larger US military conventionally, the scenario considered unconventional resistance involving ambushes, sabotage, drones and hit-and-run attacks.

One Canadian official said: "The aim of such tactics would be to impose mass casualties on US occupying forces."

The invasion and conflict modeling is said to have drawn inspiration from tactics employed by Afghan mujahedeen fighters against Soviet forces during the Soviet-Afghan war.

A Canadian political source said: "There is a growing feeling that this has moved well beyond an ordinary disagreement over tariffs. Every time one side responds, the other comes back with something stronger, and that is why people are increasingly talking about the danger of an all-out trade war – and there are now fears, after the military training it could escalate into an all-out war.

"But they may be overestimated. The concern at the moment is not that American tanks are about to cross the Canadian border. Nobody serious is suggesting that. It is that a relationship which was once regarded as virtually unbreakable is being tested in ways that would have been almost unimaginable only a few years ago.

"The latest measures have only intensified that anxiety. You have tariffs being answered with tariffs, imports being blocked and Canada actively looking at how it can become less dependent on the United States. There is no obvious sign at the moment of either government wanting to back down.

"The military dimension makes the atmosphere even more extraordinary. Canada's contingency modeling was hypothetical and officials have been very clear that an invasion is considered extremely unlikely, but the fact such scenarios have even been examined demonstrates how dramatically the political climate has changed.

"The fear in Ottawa is of an escalating cycle in which economic retaliation starts affecting the wider relationship – trade, diplomacy, defense and Canada's long-term strategic thinking.

"That doesn't mean a shooting war is coming, but it does mean the consequences could stretch far beyond the products currently caught up in the tariffs."

A second source familiar with Canada-US relations told us: "Trump's latest move will reinforce the argument inside Canada that the country can no longer assume its economic relationship with Washington will remain stable simply because the two nations have been allies for generations.

"There is enormous symbolism in what is happening. Canada and America have spent decades building one of the closest economic relationships anywhere in the world, yet they are now imposing punitive measures on each other and publicly arguing about the fundamental terms of that relationship.

"The danger with any trade war is escalation. One measure produces retaliation, retaliation produces another response, and suddenly both governments have traveled considerably further than either side might originally have intended.

"For Canada, this is increasingly about sovereignty as well as economics. Carney has made clear that he wants the country to have alternatives so that decisions taken in Washington cannot exercise the same degree of leverage over Canada's economy.

"Nobody should confuse contingency planning with evidence that military conflict is expected. But taken alongside the trade confrontation and the extraordinary political rhetoric of the past year, it helps explain why relations between two historically close neighbors now feel unusually uncertain."