Canada hits US goods with retaliatory tariffs

Canada has announced retaliatory tariffs of up to 50 per cent on about 700 American products, escalating its trade confrontation with the United States after negotiations between the two countries collapsed.

The new duties, which will take effect on September 8, will cover about $20bn worth of annual US imports and range from steel and aluminium to household appliances, electronics, railway equipment and fresh and frozen fish, The New York Times reported on Tuesday.

Canada’s government said the measures were designed primarily to protect Canadian workers, manufacturers and producers from the impact of new tariffs imposed by US President Donald Trump, rather than to generate revenue.

The most significant measure will double Canada’s existing tariffs on American steel and aluminium to 50 per cent. Other products will face tariffs of 25 per cent and 15 per cent, with Canadian authorities targeting several categories of goods that mirror Canadian exports affected by US tariffs.

The list includes clothing, forestry products, tools, smartphones, dishwashers, washing machines, cookers, aluminium foil, locomotives and steel bridges.

Canada’s Trade Minister, Mélanie Joly, said some products were deliberately selected because of their political and economic significance in the United States, including goods produced in states that supported Trump.

Joly said the government had “a lot of good cards” available to it but would not deploy its strongest measures immediately.

The latest retaliation follows the breakdown of trade negotiations in Washington and comes days after the Trump administration imposed new tariffs of up to 50 per cent on Canadian goods.

Canadian Prime Minister Mark Carney had earlier pledged that Ottawa would respond to US tariffs “dollar for dollar”, while acknowledging that retaliation would increase costs and reduce choices for Canadian consumers.

The two governments remain particularly divided over automobiles, a sector central to the economies of both countries.

Canada said on Tuesday it would maintain its 25 per cent retaliatory tariff on US-made vehicles rather than immediately matching Trump’s threat to raise the US auto tariff to 50 per cent.

Ottawa will also preserve a limited tariff-free arrangement allowing companies manufacturing vehicles in Canada to import qualifying vehicles from the US.

The decision comes as Trump threatens to double tariffs on Canadian automobiles and impose similar duties on auto parts. More than 90 per cent of vehicles manufactured in Canada are exported, making the industry particularly vulnerable to prolonged trade restrictions.

Canada imports about $272bn worth of goods from the US annually, making the American market by far its most important trading relationship. Canadian officials said Ottawa expects to spend substantially more supporting exporters affected by US tariffs than it will collect through the new import duties.

The government is also introducing support measures for Canadian businesses affected by the trade dispute, including interest-free loans modelled partly on programmes used during the COVID-19 pandemic.

Joly said the loans would not require repayment until after Trump leaves office.

The retaliation has, however, divided Canadian provincial leaders. Ontario Premier Doug Ford has strongly backed counter-tariffs, while Alberta Premier Danielle Smith has called for restraint because of the province’s heavy dependence on oil exports to the US.

Canadian economists have warned that retaliatory tariffs could ultimately hurt domestic businesses by raising the cost of imported goods, despite public support for a tougher response to Washington.

Some economists have instead urged Ottawa to consider using its exports of oil, natural gas, electricity and critical minerals as leverage, particularly potash, a major Canadian fertiliser export.

For now, however, Canada has chosen to concentrate its response on American imports, leaving its most economically consequential exports outside the latest retaliation.