Core Points - The article discusses the abrupt termination of trade negotiations between the U.S. and Canada by Trump, coinciding with his call for Fed Chair Powell to resign, highlighting escalating trade tensions and political interference in economic matters [1][21][34] Trade Relations - Canada plans to implement a 3% digital services tax on U.S. tech companies, expected to generate approximately CAD 2 billion annually, which Trump perceives as a direct attack on the U.S. [3][6] - Trump's reaction included a complete halt to trade negotiations and a threat to impose tariffs on Canadian goods within a week, leading to a significant drop in the Canadian dollar [5][6] - Canada has previously responded to U.S. tariffs by imposing a 25% tariff on U.S. automobiles not compliant with the USMCA and has also levied tariffs on U.S. goods worth about $43 billion [11][13] Economic Impact - The breakdown of U.S.-Canada trade talks is expected to negatively impact the Canadian economy, particularly the labor market, as indicated by Barclays forex strategist Skylar Montgomery Koning [7] - The Canadian trucking industry, which relies on cross-border trade for about 70% of its cargo, is experiencing a decline in orders, leading to layoffs [19] Federal Reserve Dynamics - Trump has expressed dissatisfaction with Powell's leadership, labeling him as "stupid" and "stubborn," and indicated a preference for a successor who is more inclined to lower interest rates [21][23] - Powell's term has 11 months remaining, but Trump may announce a replacement sooner, which could undermine the Fed's independence and create uncertainty in U.S. monetary policy [25][36] Global Economic Uncertainty - The escalation of the U.S.-Canada trade conflict could disrupt global supply chains, leading to shortages and price increases, affecting U.S. exports and employment [34][36] - Other countries, including the EU and Mexico, may respond with their own tariffs, further intensifying global trade tensions [36][38]