Retaliatory duties on roughly $20 billion of American goods entering Canada took effect just after midnight Tuesday, escalating an 18-month-old trade war between two of the world’s most integrated economies. Canadian Prime Minister Mark Carney authorized the levies after last month’s trade negotiations with Washington collapsed.
The dollar-for-dollar package spans hundreds of American product lines at rates between 15% and 50%. Sectors named in the schedule include steel and aluminum, dairy products such as milk and cheese, furniture, clothing, appliances, farm equipment and golf clubs. The affected goods represent about 6% of the $333.6 billion in U.S. exports subject to the retaliation base.
The action mirrors an earlier round of tariffs the United States imposed last month covering approximately $20 billion of Canadian exports, or 5% of Canadian exports to the U.S. Sectors hit on the U.S. side included wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment. The U.S. tariffs were imposed under a Depression-era law that does not permit Ottawa to invoke exemptions granted under the U.S.-Mexico-Canada Agreement.
According to Canadian and U.S. government data, Canada has shipped roughly 68% of its total exports to the United States this year, of which about 80% has moved duty-free under USMCA exemptions. That share of protected trade has cushioned the Canadian economy through months of turbulence.
Concerns are now focused on the pact itself. President Donald Trump has declined to extend USMCA for another decade, and the treaty is up for annual reviews. Uncertainty about the framework’s future has weighed on investment and growth outlooks, particularly given the size differential: Canada is waging a trade dispute against an economy roughly 13 times its size.
Polls have shown broad domestic political support for the Canadian government’s response, though that support could recede within months as tariff effects flow through supply chains and consumer prices.
