Canada Begins Tariffs on C$27.6 Billion of U.S. Imports

Canada imposed retaliatory tariffs on C$27.6 billion, roughly US$20 billion, of annual U.S. imports at 12:01 a.m. ET on September 8. The measures apply rates of 15%, 25% or 50% to specified products, according to the Department of Finance Canada’s tariff-line list.

Tariffs follow August breakdown

Prime Minister Mark Carney suspended bilateral negotiations on August 21, saying last-minute U.S. terms were unfair and uneconomic, and announced dollar-for-dollar retaliation in a government statement. U.S. duties took effect August 22 after President Donald Trump postponed their original August 19 start date.

Trump’s July 20 proclamations used Section 338 of the Tariff Act of 1930 to impose additional 50% duties on specified Canadian products connected to motor vehicles, alcoholic beverages and dairy. An August 18 White House proclamation set August 22 as the final effective date while negotiations continued.

Canada’s measures target steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics. Existing Canadian counter-tariffs on steel and aluminum rose from 25% to 50%, while separate auto counter-tariffs remain in force. The C$27.6 billion figure covers a targeted portion of bilateral goods trade rather than all U.S. imports or all Canadian exports.

Costs concentrate in selected sectors

Canadian importers of covered U.S. goods now face higher landed costs. They may raise prices, accept lower margins, or seek Canadian and third-country suppliers. U.S. exporters of the targeted goods face reduced price competitiveness in Canada.

The covered trade represented about 6% of U.S. goods exports to Canada in 2025, according to the research dossier. That scale limits the likely aggregate effect on U.S. gross domestic product, while companies and regions tied to the listed sectors could face more concentrated effects.

Canada has greater exposure to sustained U.S. restrictions because the United States received 72.5% of Canadian merchandise exports in 2025, Global Affairs Canada reported. Statistics Canada estimates U.S. demand supported about 694,000 Canadian manufacturing jobs and 42.4% of Canadian manufacturing value added in 2024.

Exposure is especially high in auto assembly, steel and aluminum. U.S. demand accounted for 76.4% of jobs in Canadian automobile and light-duty vehicle manufacturing, 67% of iron and steel mill jobs, and 77.6% of aluminum-sector jobs in 2024, according to Statistics Canada.

Support package and unresolved issues

Ottawa paired the tariffs with C$7.5 billion in business and worker support: C$2 billion for diversification projects, C$1.5 billion for regional tariff response, C$500 million in business liquidity, and C$3.5 billion for workers and employers. The package can ease short-term financing and employment pressure, while placing part of the response cost on Canadian public finances.

Integrated manufacturing may spread effects through cross-border suppliers because Canadian manufactured exports to the United States contain substantial U.S.-made inputs. Decisions to relocate production, redesign supply chains, or seek exemptions would require time and capital, and have not yet been established as outcomes.

Energy is not a confirmed target in this round. The United States imported an average 3.9 million barrels a day of Canadian crude in 2025, and the U.S. Energy Information Administration says recent U.S. tariff actions exempt energy trade. Broader measures involving energy, potash, or food exports would require further government action.

The United States says Canadian alcohol restrictions, dairy quota allocation and motor-vehicle measures discriminate against U.S. commerce. Canada describes its tariffs as a response to unjustified U.S. duties. No cited neutral adjudication has resolved those positions, and the timing of renewed negotiations, exclusions, remission decisions, and any further escalation remains uncertain.