Canada’s retaliatory tariffs on nearly C$28bn ($20bn) worth of American goods came into force on Tuesday as the Canada US trade war deepened, with no resumption of negotiations in sight. Rates on some products reach as high as 50%, covering hundreds of items from steel and furniture to cotton T-shirts.
Talks at a standstill as both sides trade blame
Prime Minister Mark Carney said last week that Canada remained ready to reach a deal that was ‘durable’ and in the best interests of both countries. ‘We’re ready to sit down and strike that deal when the Americans are ready,’ he told reporters.
US trade representative Jamieson Greer pushed back, saying the initiative lay with Ottawa. ‘We offered them the best deal, they looked at it square in the face and turned around,’ Greer said in an interview with Fox News, adding that communication with the Canadians had been sparse since talks collapsed in late August.
In a separate interview with Canadian broadcaster CBC, Greer cautioned against retaliation and suggested the US might respond by banning the import of some Canadian products. President Donald Trump also threatened on Monday to halt all US business with Canada-based airplane maker Bombardier unless it moved its manufacturing south. Bombardier contributed over C$7bn to Canada’s annual GDP in 2024, according to a report commissioned by the company from PwC.
According to The Hill, Jacob Jensen, director of trade policy at the American Action Forum, said the limits cover $967 million worth of Canadian imports, based on 2025 data. To put that in context, US businesses imported roughly $382 billion worth of goods from Canada last year, according to data from the US Census Bureau cited by The Hill.
Seafood carve-out signals the Canada US trade war’s domestic pressures
Fresh fish and lobster were initially included in Canada’s counter-tariff list but were later removed after pushback from the seafood industry. The lobster trade illustrates the difficulty of the Canada US trade war for Ottawa: American-caught lobster is frequently shipped north to be processed before being exported back to the US market, making the two industries heavily interdependent.
Canada’s counter-tariffs are in addition to existing retaliatory taxes it had already placed on finished American cars and trucks that do not comply with the free trade agreement between Canada, the US and Mexico, known as the USMCA in the US and CUSMA in Canada. The US currently has in place a 25% tax on Canadian cars and trucks, as well as levies on Canadian steel, aluminium and lumber. In late August, Trump imposed new 50% tariffs on other goods including dairy, alcohol, hockey sticks and perfume.
The Canadian Chamber of Commerce has urged the Carney government to take a targeted approach. ‘Businesses understand retaliation but don’t want to see endless escalation,’ said the Chamber’s CEO and President Candace Laing in a statement on Friday. She added, however, that businesses ‘are preparing for this trade dispute to last’.
Economists warn that the latest counter-tariffs will raise prices for consumers on everyday goods such as clothing, food and furniture. Canada and the US have a bilateral trading relationship valued at nearly $900bn in 2025.
Canada looks to diversify as economic data turns mixed
Canada’s economy had shown resilience ahead of the latest measures. GDP grew 3.3% in the second quarter and the country added 181,000 jobs from April to July. But around 41,000 jobs were lost in August, a period that coincided with the new US tariffs and the breakdown of trade talks.
Carney has vowed to diversify Canada’s trade away from the US. July figures show the share of US-bound Canadian exports dropped to 66% from an average of 75% before the trade war began. In a move that underlined that shift, Carney also struck a deal with China earlier this year, allowing a limited number of Chinese electric vehicles into Canada at a sharply reduced tariff in exchange for China lowering tariffs on Canadian canola, PBS NewsHour reported.
Polls suggest the majority of Canadians support their country imposing retaliatory tariffs, even as businesses brace for a prolonged standoff. Laing’s warning that companies are already preparing for the dispute to last signals that neither side expects a quick resolution.
