Ottawa | Reuters — Canada’s retaliatory tariffs on U.S. goods took effect just after midnight on Tuesday as Prime Minister Mark Carney increased economic pressure on his country’s biggest trading partner after negotiations collapsed last month, intensifying an 18-month-old trade war.
The counter-tariffs cover nearly C$28 billion of U.S. goods, with duties ranging from 15 per cent to 50 per cent across products from dairy, steel and furniture to clothing and electronics.
WHY IT MATTERS: Elevated trade tensions between Canada and the U.S. adds uncertainty to the status of CUSMA, which the U.S. declined to renew earlier this year. Tariffs and counter-tariffs, meanwhile, will reduce demand for some agricultural goods like Canadian honey.
The dollar-for-dollar retaliation marks an escalation in the dispute between the neighboring countries, and U.S. and Canadian officials have traded blame for scuttling a deal that seemed close to fruition two weeks ago. The rising tensions create uncertainty about the broader Canada-U.S.-Mexico free trade agreement, which is up for annual reviews after U.S. President Donald Trump declined to extend it for another decade.
“What we are worried about is an escalatory spiral,” said Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance and a member of Carney’s advisory committee on bilateral U.S. economic relations.
“But at the same time, we totally understand that the prime minister needs to find areas of leverage,” Harvey said.
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