Canada imposed retaliatory tariffs of up to 50% on U.S. products in response to tariff measures by the administration of Donald Trump. The United States is also mentioning raising auto tariffs and banning sales of Canadian aircraft, increasing the likelihood the trade dispute between the two countries will drag on.
Canada, starting at 12 a.m. on the 8th (local time), imposed 15%–50% tariffs on $27.6 billion Canadian dollars (about $20 billion) worth of U.S. imports.
Tariff rates on some steel and aluminum products rose to 50% from the previous 25%. Steel and aluminum derivative products, home appliances, and dairy products including cheese, as well as fish and seafood, are subject to 25%. Items such as industrial tools carry a 15% tariff.
Earlier, starting on the 22nd of last month, the United States imposed 50% tariffs on about $20 billion worth of Canadian products. The Canadian government has said it would respond to U.S. tariffs under a "dollar for dollar, rate for rate" principle.
The two countries continued talks until the end of last month and at one point were close to an agreement, but failed to bridge last-minute differences. After the talks collapsed, finger-pointing and retaliatory steps followed.
President Trump signed an executive order to change the name of Lake Ontario on the U.S.-Canada border to "Lake America." He mocked Canada Prime Minister Mark Carney and Ontario Premier Doug Ford on social media as "clowns," and also said he would raise tariffs on Canadian automobiles to 50% starting next year.
On the 6th, two days before the retaliatory tariffs took effect, he took issue with the exchange rate imbalance between the U.S. dollar and the Canadian dollar. On the 7th, he targeted Canadian aircraft manufacturer Bombardier, threatening, "Stop selling Bombardier in the United States from now on."
However, as the two nations are long-time allies and major trading partners with high economic interdependence, both sides are expected to suffer considerable damage the longer the conflict lasts.
The prevailing view is that Canada, with its smaller economy, will take a relatively bigger hit. But the retaliatory tariffs are also expected to be a significant burden on the United States ahead of the midterm elections in Nov.
Bloomberg analyzed that Canada's tariffs could deal a heavy blow to exporters in Michigan and Ohio, battlegrounds in the midterm elections. Republican lawmakers in swing districts have been put in a position to explain to voters the damage caused by President Trump's tariff policy.
Susan Collins, a Republican senator from Maine, which borders Canada, issued a statement publicly criticizing the Trump administration's tariff policy.
Some also say Canada is trying to pull the United States back to the negotiating table by increasing the burden on U.S. corporations and consumers through retaliatory tariffs.
Brian Clow, who served as an adviser on U.S. relations to former Canada Prime Minister Justin Trudeau, told Bloomberg, "Canada's retaliatory tariffs are intended to make U.S. corporations and consumers feel the expense of this trade war and create an incentive for the United States to return to the negotiating table."
He added, "Canada imposed tariffs not because it wants a trade war, but because it wants to end one."
However, the chances of talks resuming anytime soon do not appear high. A Canada government official who requested anonymity said as of the weekend there were no scheduled meetings with the U.S. administration. The White House did not respond to a request for comment.