Canadian countertariffs escalate trade war

Canada’s retaliatory tariffs on U.S. goods took effect on Tuesday, Sept. 8, threatening higher costs for businesses and consumers that already have been feeling the pinch of the countries’ trade battle.

The new duties intensify an 18-month-old trade war and have spurred Canadian Prime Minister Mark Carney to urge a further shift away from the country’s biggest trading partner. The levies affect more than 600 product categories, including metals like aluminum and steel, paper and textile products, building materials, dairy products and more.

They follow 50% tariffs the United States imposed on some $20 billion of Canadian goods last month, after several rounds of negotiations collapsed. The breakdown has widened a rift between the longtime allies, both of whom have blamed the other for the failed talks. And it all comes immediately following the new Gordie Howe International Bridge border crossing opening in Detroit, meant to support the economic partnership between the two nations.

Meanwhile, business owners like Graham Wilkins of Paluski Boats in Lakefield, Ontario, are caught in the middle.

“The last two years have been much more troublesome than the previous 35,” Wilkins said.

The direct impact of tariffs for him has been higher aluminum costs. Wilkins uses aluminum tubing to manufacture canoe, kayak and rafting paddles. He said aluminum suppliers in Canada have seen increased demand as tariffs have disrupted their U.S. business, prompting them to seek customers elsewhere while continuing to sell into the U.S. market. As a result, competition for aluminum has pushed his costs up by about 20%, he said.

“I’m paying more money, because there’s more demand for the aluminum coming from Quebec,” he said.

Meanwhile, the indirect impact of tariffs also has been those imposed on some of his U.S. customers. Wilkins said his paddles are made entirely in Canada and qualify for tariff-free treatment under the U.S.-Mexico-Canada trade agreement. However, he estimates that under 10% of his U.S. shipments have still been hit with unexpected duties, sometimes resulting in an additional charge of about $300 for the customer.

“The uncertainty is difficult,” Wilkins said.

That uncertainty also makes it harder for him to price products and plan inventory. He said his aluminum supplier now asks him to place orders earlier, but Wilkins said he may not know the final price of the material until four to six weeks before it ships. His paddle prices have increased about 20% this year, he said.

He has also stopped attending at least one U.S. trade show and has cut personal travel to the United States because of concerns surrounding the broader border environment.

“We’re hoping in this part of the world that things … I don’t know if they can ever return to the way it was, but it would be great if we return to a bit more normal,” he said.

In a video posted on YouTube after the tariffs took effect, Carney urged national unity and self-reliance.

“We have everything we need to pivot and prosper,” he said. “That pivot will come at a cost. There’s always a cost to action. But it doesn’t come close to the cost of standing still.”

A government source told Reuters there are currently no talks between the two sides on the level of ministers or government officials.

Ottawa designed the retaliatory measures to put economic and political pressure on Washington, Canadian government officials said, and the tariffs are expected to hit sectors in some competitive states such as Michigan and Ohio ahead of U.S. midterm elections in November.

More: Canada’s retaliatory tariffs poised to hit Michigan manufacturing

The latest tariffs don’t directly affect automobiles, which already have faced 25% tariffs since last year with some offsets and exceptions under USMCA. But vehicles still rely on parts and materials affected by the duties and may cross back and forth over the border. Automakers have already paid billions of dollars in tariffs implemented under the Trump administration. Jeep maker Stellantis NV had shifted planned production of the Jeep Compass SUV from an Ontario plant to the United States.

Still, it likely will be another six months or more before consumers see cost increases from the new tariffs, said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions LLC.

“At that point, tariffs would be considered semi-permanent, if not permanent,” Fiorani said. “Manufacturers are absorbing a lot of those costs at the moment.”

Trump also threatened last month to raise U.S. tariffs on all cars, trucks and automotive parts from Canada to 50% starting Jan. 1.

“The tariffs on the U.S. side don’t seem to fully understand the importance of Canada to the U.S.,” Fiorani said. “The negotiations have to continue to a point where both sides understand the importance of each other.”

He added: “The U.S., Canada and Mexico as individuals cannot keep up with the EU as an automotive industry, and there’s no way North America can compete with China, unless it’s sticking together and using each country for its individual strength as a part of this production process.”

Stellantis declined to comment. A representative for General Motors Co. referred comment to the American Automotive Policy Council, which didn’t immediately respond to request for remark. A spokesperson for Ford Motor Co. didn’t immediately respond to a request for comment.

MEMA, the trade association for automotive parts suppliers, said it remains hopeful for a framework that preserves North American competitiveness, according to a statement sent by communications professional Frank Buscemi.

“MEMA, The Vehicle Suppliers Association, is concerned by the continued escalation of trade actions between the United States and Canada,” the statement said. “The implementation of additional Canadian counter-tariffs adds new costs and uncertainty for companies operating across a highly integrated North American supply chain. For vehicle suppliers, tariffs and counter-tariffs on both sides of the border make it more difficult to plan, invest, and compete globally.”

Stephen Kurily, spokesperson for Canada-based Magna International Inc., a major automotive supplier, declined to comment on ongoing policy discussion but said the company is following the developments closely and is focused on supporting its customers and global operations.

The countertariffs cover some $20 billion of U.S. goods, with duties ranging from 15% to 50% across products from steel and furniture to clothing and electronics.

While the new tariffs affect a small amount of exports compared with total trade between the U.S. and Canada, some analysts worry the standoff could destabilize the U.S.-Mexico-Canada Agreement, the free-trade pact that succeeded NAFTA. Together they have underpinned commerce across North America for decades.

“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.

Trump’s social media posts focused on Canada over the holiday weekend as Ottawa’s tariff deadline approached.

Canadian private jet maker Bombardier would no longer be allowed to sell its planes in the United States unless it started manufacturing in the country, Trump said in a post on Truth Social on Monday, without saying whether an official government order would follow. The company’s shares were down more than 6% on the Toronto Stock Exchange in afternoon trading Sept 8.

On Sept. 7, Trump posted a map of North America draped in the U.S. flag, including Canada and Mexico. He also shared an AI-generated image reviving a running jab at Carney, calling him “Governor,” a reference to his repeated taunt that Canada should become the 51st U.S. state.

U.S. tariffs hit Canadian wine, furniture, dairy

Trump’s tariffs implemented last month hit sectors including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment, covering $20 billion, or 5%, of Canadian exports to the U.S.

According to Canadian and U.S. government data, Canada has shipped almost 68% of total exports to the U.S. this year, out of which roughly 80% moved duty-free due to exemptions under the USMCA. Protections under the agreement have provided the domestic economy some resilience.

The new tariffs, imposed under a Depression-era U.S. law, do not allow Ottawa to exercise USMCA exemptions.

Concerns about the USMCA’s future have fuelled uncertainty about investment and growth, as Canada wages a trade war against an economy 13 times its size.

Polls also show Carney has broad support from Canadians, but that could disappear within months as the consequences of the trade war sink in, according to political analysts.

A new poll from Angus Reid on Tuesday showed that approval of Carney’s performance jumped 11 points to 62% from an August poll.

Meanwhile, just 20% of Americans approved of Trump’s tariffs on Canadian goods, a Reuters/Ipsos poll found.

Reuters’ Promit Mukherjee and Detroit News Staff Writers Candice Williams and Breana Noble contributed.

This article originally appeared on The Detroit News: Canadian countertariffs escalate trade war