Canada hits US goods with tariffs of up to 50% as trade dispute escalates

Canada's counter-tariffs on various US goods take effect on Tuesday, in response to US tariffs on Canadian products imposed after trade talks between the two neighbours collapsed last month. The counter-tariffs cover C$27.6 billion (€17bn) worth of US goods. The duties of 15%, 25% and 50% apply to hundreds of products, including steel and aluminium, furniture, clothing, cosmetics, household appliances, electronics, agricultural equipment and dairy goods such as cheese. Ottawa said the measures match the latest US tariffs “dollar for dollar” and “rate for rate”. Some seafood products were removed from Canada’s initial list. The counter-tariffs cover around 6% of the goods the United States exported to Canada last year, according to the Associated Press. Canada has also retaliated beyond tariffs. Eight of its 10 provinces continue to restrict or prohibit sales of US alcohol, according to the AP. The Distilled Spirits Council of the United States said American spirits exports to Canada had fallen by more than 70% year on year since the restrictions were introduced. RBC Economics said Canada’s measures were unlikely to have a noticeable effect on overall US growth, although some American businesses could be hit considerably harder. US tariffs pose a modestly negative risk to Canada's overall economy, but analysts note that they have a sharper impact on Central Canada's manufacturing sector. The tariffs come after US President Donald Trump imposed 50% duties on the same value of Canadian products from 22 August, citing what Washington described as “discriminatory treatment” of the US alcohol, automotive and dairy industries. The US measures affect products including wine, furniture, dairy goods, cement, clothing, fishing rods and hockey equipment. Together, they cover approximately 5.5% of Canadian exports to the United States.

Trump threatens Bombardier

On Monday, Trump threatened to block sales by Canadian aircraft maker Bombardier in the United States unless it moved manufacturing there. “No more selling Bombardier in the United States!” Trump posted in capital letters on his Truth Social platform, although he did not explain how such a ban would be introduced. Thousands of Bombardier aircraft currently operate in US airlines' domestic fleets. In a statement, the company said it supports “tens of thousands of jobs across the United States”, including direct employment in more than 20 states. It also spends more than $2.5 billion (€2.1 billion) a year with approximately 2,800 US suppliers across 47 states. “Bombardier values its great partnership with American companies and its US employees,” the company said.

Trade talks remain suspended

Negotiations broke down on 21 August after several days of meetings in Washington. Canadian Prime Minister Mark Carney said he had suspended the talks because the Trump administration’s terms were unacceptable. He said US negotiators had introduced last-minute restrictions on Canada’s ability to make trade agreements with other countries. The dispute has increasingly extended beyond trade policy. Trump signed an order in August directing the US government to refer to Lake Ontario, which lies on the border between the two countries, as “Lake America”. Google and Apple subsequently adopted the name for users in the US, although Canada does not recognise the change. Carney said talks could resume when the Americans “stop doing memes, stop throwing shade, stop trying to be tough” and start being serious. The trade disputes began after Trump returned to office and imposed a series of tariffs on Canadian goods despite having negotiated and repeatedly praised the North American trade agreement during his first term. Many of those tariffs violate the pact. The rupture is especially striking because the countries have long shared one of the world’s closest relationships, with deeply integrated economies, close defence and security cooperation, vast cultural ties and, before relations deteriorated, about 400,000 people crossing the border each day. Although Carney has strong public support in Canada, the country remains heavily reliant on its neighbour. Nearly 60% of Canada’s imports come from the United States, while about 70% of its exports go to the US market. To support affected businesses and workers, the Canadian government has announced a C$7.5 billion (€4.6bn) aid package.