Canada's retaliatory tariffs on US goods take effect as trade talks stall
Canadian counter-tariffs covering nearly C$28 billion in American products are now in force, with no active negotiations underway despite both governments expressing willingness to deal.
What happened
Canada's retaliatory tariffs on US goods came into effect on Tuesday, applying to nearly C$28 billion worth of American products including steel, furniture, cotton T-shirts, and initially fresh fish and lobster—though Canada removed seafood items after pushback from its own industry. The counter-tariffs will be as high as 50% and Canada's counter-tariffs were described as 'dollar-for-dollar'. These tariffs follow US tariffs already in place, including a 25% tax on Canadian cars and trucks, and new 50% tariffs imposed in late August on items like dairy, alcohol, hockey sticks and perfume. Trade talks between the countries collapsed in late August with no movement to resume them; US Trade Representative Jamieson Greer stated the ball is in Canada's court and warned the US might ban some Canadian product imports, while President Trump threatened to halt US business with Bombardier unless it relocates manufacturing south.
Context
Canada and the US have the world's largest bilateral trading relationship valued at nearly $900 billion in 2025, and the escalating tariffs are affecting both economies significantly. Bombardier, one of Canada's largest companies, contributed over C$7 billion to Canadian annual GDP in 2024, making Trump's threat to the aerospace manufacturer economically consequential. Economists warn the tariffs will raise consumer prices on everyday goods, though the Canadian Chamber of Commerce acknowledged businesses are preparing for a protracted dispute. Canada's labor market showed resilience with 3.3% GDP growth in Q2 and 181,000 jobs gained April to July, but the economy shed around 41,000 jobs in August coinciding with the new tariffs and collapsed talks. Canadian export patterns are already shifting, with the share of US-bound Canadian exports falling to 66% in July from a pre-war average of 75%, reflecting Canada's stated goal to diversify trade away from the US.
What's disputed
US Trade Representative Greer claims the US 'offered them the best deal' which Canada rejected, while the sourcing does not include Canada's characterization of that offer or its rationale for rejecting it.