What to know about US-Canada trade war impacts
The burgeoning trade war between the U.S. and Canada will impact a slew of products that businesses in both countries import from one another.
After trade talks between Trump administration officials and their Canadian counterparts broke down late last week, President Trump’s 50 percent levies on $20 billion worth of goods imported from America’s northern neighbor went into effect Saturday.
Canadian Prime Minister Mark Carney responded in kind, saying Saturday his government will match the U.S. tariffs “dollar for dollar” starting Sept. 8. Trump then threatened to take the trade war even further on Monday, saying he will raise tariffs on Canadian cars, automotive parts and steel to 50 percent starting on Jan. 1.
Here is what to know about the ongoing battle and its potential impacts.
Which goods are impacted?
Canadian products covered under the new tariffs include wine, hockey sticks and cement, per the White House.
But those are just a fraction of the sheer volume of products to which the import taxes will apply. Other covered products include natural honey, various types of essential oils, lip and eye makeup, dog leashes and collars as well as wallpaper, according to an extensive list of items the White House released in July.
The tariffs do not apply to energy, potash, fish, critical minerals and goods already tariffed under Section 232 of the Trade Expansion Act of 1962, the administration noted.
Under Section 232, Trump has imposed duties on steel and aluminum imports on national security grounds, with former President Biden citing it to raise levies on Russian aluminum to 200 percent after the country invaded Ukraine.
Even if an American business imports a Canadian product covered by the U.S.-Mexico-Canada trade agreement, the administration will still tax the product by 50 percent if it is on the aforementioned list, the White House stated last month.
While the new tariffs apply to a laundry list of products, they still account for about 5 percent of U.S. imports from Canada.
Last year, American businesses imported nearly $382 billion worth of goods from the Land of the Maple Leaf, while exporting more than $333 billion worth of products, according to U.S. Census Bureau data.
As for the goods exported from the U.S. to Canada, Carney said Saturday his government’s retaliatory tariffs will be concentrated in sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.
The Canadian leader said his government will unveil details regarding the retaliatory measures “in the coming days.”
How is Trump justifying these tariffs?
Trump is citing Section 338 of the Tariff Act of 1930 in slapping the latest round of levies on Canadian goods.
That provision of the law, known as the Smoot-Hawley Tariff Act, allows the president to impose tariffs of up to 50 percent on foreign countries that place “any burden or disadvantage upon the commerce” of U.S. exporters via discriminatory trading practices.
In issuing the tariffs, the White House cited the Canadian government imposing tariffs and quotas specifically on U.S. motor vehicles — actions taken in response to Trump’s April 2025 “Liberation Day” tariffs.
The administration also noted all but two Canadian provinces and territories have halted the purchase, distribution or retailing of U.S. alcoholic beverages in response to the president’s sweeping levies — which the Supreme Court invalidated in February, forcing U.S. Customs and Border Protection to issue refunds to American businesses.
The Canadian government has established “tariff-rate quotas” on American cheese that are more restrictive than similar imports from the European Union, the White House release added.
Carney, though, said Saturday his negotiators “were willing” to drop retaliatory tariffs on American steel, aluminum and autos in exchange for their U.S. counterparts offering to lower levies “to levels that made it economic for Canadian companies to export” to the U.S.
But the Canadian prime minister said U.S. officials proposed “uneconomic” and “unfair” terms late in the week, leading him to call off the talks.
“In short, they asked too much and offered too little,” Carney said of the Trump administration. “More fundamentally, the cumulative effect of U.S. demands revealed the limits of their commitment to a true economic partnership.”
How will the trade war impact the U.S. economy?
The trade war escalates economic tensions between the U.S. and one of its top trading partners, with implications for American businesses and consumers.
U.S. goods and services trade with Canada totaled an estimated $872.3 billion in 2025, according to the office of U.S. Trade Representative Jamieson Greer.
That put Canada second behind Mexico, and third ahead of China, in terms of total goods and services traded to and from the U.S. last year, based on an analysis from the Congressional Research Service.
Last year, 71.6 percent of exports from Canadian businesses went to the U.S., down from 76 percent the year prior, Statistique Canada reported.
Nearly 59 percent of Canadian imports were from the U.S. in 2025, per the Canadian government’s research service.
In a Monday post on social media, economist Brad Setser wrote that Trump’s new tariffs announced earlier in the day would pose a “direct cost” to the U.S. economy given that Canadian cars and trucks “have a lot” of American-made content.
“And of course Canada will retaliate on US made cars/trucks,” added Setser, who worked on the National Economic Council and in the Treasury Department during the Obama administration and is now a senior fellow at the Council on Foreign Relations.
Copyright 2026 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.For the latest news, weather, sports, and streaming video, head to The Hill.