Ding ding: Another round of Canada’s trade fight with the U.S. is underway.
What happened: Canada’s retaliatory tariffs on around $28 billion of imports from the U.S. take effect today, and are expected to draw further escalation by the Trump administration later this week.
Nearly 700 products will be subject to tariffs of either 15%, 25%, or 50%. The most heavily affected imports will be industrial goods — think aluminum, iron and steel products, cardboard boxes, and screws.
Consumer goods will be more sheltered, but some imports from the U.S., including clothing, furniture, dairy products, and cosmetics, will be affected.
Why it matters: The counter-tariffs will drag on growth and raise consumer prices, according to analysis by Oxford Economics, but the greater risk is that the trade fight continues escalating, with the U.S. further ratcheting up attacks against Canada’s economy.
If you believe their rhetoric (never a sure bet these days), it does seem like that is what U.S. officials have planned. Last week, U.S. Trade Representative Jamieson Greer confirmed that the U.S. plans to add more tariffs on Canadian goods this week, including potentially banning some imports altogether.
Over the past 48 hours, Donald Trump took to Truth Social to decry “Canada’s (currency) Dollar imbalance with the U.S.,” threaten to ban the sale of Bombardier products in the U.S., post a map of the U.S. encompassing Canada and Mexico, and share an AI-generated cartoon of himself calling Prime Minister Mark Carney “Governor.” Again, that’s just in the past 48 hours.
Zoom out: So far, Canadians appear to support taking a firm line with the U.S. — 76% say “Canada did the right thing” by walking away from talks last month — but whether that will hold up as the economic costs mount remains to be seen.—TS
