Canada has imposed retaliatory tariffs on nearly C$28 billion ($20 billion) worth of American goods, escalating tensions with its largest trading partner as efforts to reach a new trade agreement remain stalled.
The counter-tariffs, which came into effect at midnight on Tuesday, cover hundreds of US products, including steel, furniture, clothing and other manufactured goods. Some of the tariffs will be as high as 50%.
Fresh fish and lobster were initially included in the list but were later removed following strong opposition from Canada’s seafood industry.
The decision highlights the difficult balancing act facing the Canadian government as it seeks to respond to US trade measures without causing further damage to its own economy.
Both Canadian and US officials have expressed a desire to reach a deal, but there has been little progress since trade negotiations collapsed in late August.
Canadian Prime Minister Mark Carney said last week that his government remained committed to securing a durable agreement that would protect Canada’s interests.
“We’re ready to sit down and strike that deal when the Americans are ready,” Carney said.
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However, US Trade Representative Jamieson Greer suggested that Washington had already made its position clear.
“We offered them the best deal, they looked at it square in the face and turned around,” Greer told Fox News, adding that communication between the two sides had been limited since negotiations broke down.
In an interview with Canadian broadcaster CBC, Greer also warned Ottawa against escalating the dispute, suggesting that the US could respond with further measures, including potentially restricting imports of certain Canadian products.
Trump Escalates Pressure
US President Donald Trump has continued to increase pressure on Canada.
On Monday, Trump threatened to halt all US business with Canadian aircraft manufacturer Bombardier unless the company moved some of its manufacturing operations to the United States.
Bombardier is one of Canada’s major companies and contributed more than C$7 billion to the country’s annual GDP in 2024, according to a report commissioned by the company and prepared by PwC.
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Trump has also launched a series of attacks against Canada on his Truth Social platform, including criticism of the Canadian-US exchange rate.
In another post, he shared a map showing Canada, Mexico and Greenland overlaid with the US flag.
The escalating dispute threatens one of the world’s largest bilateral trading relationships. Trade between Canada and the United States was worth nearly $900 billion in 2025.
More Tariffs Already in Place
The latest Canadian measures come on top of existing trade restrictions.
The US currently imposes a 25% tariff on Canadian cars and trucks, as well as tariffs on Canadian steel, aluminium and lumber.
In late August, Trump also imposed new 50% tariffs on a range of other Canadian products, including dairy goods, alcohol, hockey sticks and perfume.
Canada’s latest measures have been described by Carney as “dollar-for-dollar” retaliation.
They will apply to hundreds of American products entering Canada and are separate from existing Canadian retaliatory tariffs on finished US cars and trucks that do not comply with the free-trade agreement between the three North American countries, known as USMCA in the United States and CUSMA in Canada.
Canadian Consumers Face Higher Prices
While public opinion appears to support Canada’s response, economists have warned that retaliatory tariffs could ultimately increase the cost of everyday goods.
Recent polling suggests that a majority of Canadians support imposing retaliatory tariffs on American products.
However, economists warn that the measures could push up prices for consumers, particularly for clothing, food and furniture.
The Canadian Chamber of Commerce has urged the government to take a targeted approach rather than allow the trade dispute to spiral into an extended cycle of retaliation.
“Businesses understand retaliation but don’t want to see endless escalation,” Chamber president and CEO Candace Laing said.
She added that businesses were preparing for the possibility that the dispute could continue for some time.
Seafood Industry Forces Change
The Canadian government’s decision to remove dozens of seafood products from the tariff list followed pressure from the fisheries sector.
The move reflects the complicated nature of trade between the two countries, particularly in industries where Canadian and American businesses depend heavily on each other.
The lobster industry provides a striking example. Lobster caught in the United States is sometimes transported to Canada for processing before being sent back to the US for sale.
Industry representatives warned that imposing tariffs on such products could hurt Canadian businesses while also disrupting supply chains serving American consumers.
Canadian Economy Shows Mixed Signals
The latest escalation comes as Canada’s economy sends mixed signals.
Canada’s GDP expanded by 3.3% in the second quarter, while the country added approximately 181,000 jobs between April and July.
However, the economy lost around 41,000 jobs in August, a decline that came as the latest US tariffs took effect and trade negotiations between Ottawa and Washington broke down.
Manufacturing was among the sectors to record a modest increase.
The Canadian government has attributed the improvement partly to consumers and businesses purchasing more domestically produced goods amid the trade dispute.
Prime Minister Carney has also pledged to reduce Canada’s dependence on the US by diversifying the country’s international trade relationships.
The strategy may already be showing early signs of progress.
July figures showed that the proportion of Canadian exports destined for the United States had fallen to about 66%, compared with an average of roughly 75% before the trade war.
For now, however, Canada and the United States remain deeply economically intertwined, leaving businesses on both sides facing an uncertain future as the tariff dispute continues.
