OTTAWA: Canada hit back with retaliatory tariffs on about $20 billion worth of US annual imports and rolled out aid for businesses and workers, matching Washington's latest duties dollar-for-dollar. The counter-tariffs on US goods take effect on September 8 and impose duties of 15%, 25% and 50% across around 700 products imported from south of the border, a government statement said.
US President Donald Trump's new 50% tariffs on $20 billion of Canadian imports took effect on Saturday after talks between the two countries collapsed. The new tit-for-tat tariffs mark a new low in relations between the longtime allies, and Trump earlier on Tuesday threatened to rename Lake Ontario, which straddles both countries, "Lake America." "Our dollar-for-dollar, rate-for-rate counter-tariffs as well as a multi-billion-dollar support package will protect workers, farmers, families, and businesses," Canada's Finance Minister François-Philippe Champagne said. The White House and the US Trade Representative did not immediately respond to a request for comment.
Canada levied the 50% tariffs on steel, aluminium, furniture and clothing, set the 25% tariffs on cheese, appliances and some seafood, and placed the 15% tariffs on electronics and tools, a Canadian government official told reporters. Trump's new tariffs are relatively narrow, affecting roughly 5% of Canada's exports to the United States. But trade analysts say they could have severe, concentrated effects on some sectors that are already struggling, like wood products, particularly kitchen cabinet makers.
Canada's retaliatory tariffs, calculated using 2024 trade figures, cover goods accounting for nearly 4.5% of Canada's imports from the United States. Industry Minister Melanie Joly said the counter-tariffs were primarily aimed at protecting Canadian businesses but were also aimed at applying political pressure before Americans vote in the November 3 midterm elections. "We need to make sure that the competitors don't have access to the Canadian market in a better way than their own... products, and that's why the retailers need to show that from Canada," she said. "Second, we're also targeting products that will target states in the US and so we're being wise and strategic to put political pressure, and that's why we think it's the right thing to do right now." The Canadian tariffs will also cover some prepared foods, perfumes and toiletries, plastics, lumber, wood pulp and paper products, carpets and clothing.
The list also targets industrial goods including iron and steel, aluminium, hand tools and other metal products, machinery and electrical equipment, as well as rail engines, motorcycles, furniture and gaming equipment, government documents showed. Canada also unveiled a C$7.5 billion package of measures featuring support for small and medium-sized businesses, a stream for funding cash flow of companies, and support for workers at risk due to the new tariffs. The Business Development Bank of Canada, a federal lender, will provide part of the support to affected businesses, offering interest-free loans of between C$2.5 million and C$5 million. Joly said companies would not be required to make repayments for 36 months, a period that would run through the end of the Trump administration's term.
The resurgent trade spat between US President Donald Trump and Canadian Prime Minister Mark Carney comes at a delicate juncture for both North American countries - and the global economy. Missteps between the neighbouring G7 nations could have wide-ranging economic impacts. Trump's fight with Canada could signal the demise of America's biggest trade agreement: the US-Mexico-Canada Agreement (USMCA). As a reminder, Mexico is America's largest trading partner, with total goods trade between the two reaching $872 billion last year. USMCA, the revised version of 1994's North American Free Trade Agreement (NAFTA), has been in place for six years but is under serious threat.
Trump opted on July 1 not to renew it, subjecting it to annual reviews, although talks are continuing. Unless the three countries agree on fresh revisions, the pact will gradually be wound down and is most likely to be replaced by bilateral agreements, adding yet more uncertainty and complexity to the future of transshipment, investment, and product sourcing in this critical supply chain. Trump's statements surrounding the USMCA renewal don't exactly inspire confidence. — Reuters
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