Canada braces for prolonged trade war as counter-tariffs on US take effect

Canada’s retaliatory tariffs on nearly $20 billion worth of US imports took effect on Tuesday, marking a sharp escalation in trade tensions between the two nations. The tariffs, which range from 15% to 50%, target a wide array of American goods, including steel, dairy, furniture, clothing, and electronics. The move follows the imposition of similar levies by the US on Canadian exports, with Trump accusing Canada of discriminatory practices. The Canadian government described the countermeasures as “dollar-for-dollar,” aiming to protect domestic industries from the impact of US tariffs. The retaliatory tariffs came into effect at 12:01 a.m. local time, applying to hundreds of products imported from the US. However, Canada excluded fresh fish and lobster from the list after pressure from its seafood industry, indicating the delicate balancing act required to retaliate without harming its own economy. The lobster industry in both countries relies heavily on cross-border cooperation, with American-caught lobster often processed in Canada before being returned to the US for sale. This exclusion highlights the complexity of managing trade disputes while safeguarding key economic sectors. Trade negotiations between Ottawa and Washington collapsed in late August without reaching an agreement. Canadian Prime Minister Mark Carney has stated that his government remains open to a deal that serves the interests of both countries. “We’re ready to sit down and strike that deal when the Americans are ready,” Carney said during a press briefing. However, US Trade Representative Jamieson Greer suggested the responsibility for resuming talks lies with Canada. “We offered them the best deal, they looked at it square in the face and turned around,” Greer said in an interview with Fox News. There has been little communication between the two sides since the breakdown of talks, leaving the future of the trade relationship uncertain. The trade dispute has also extended beyond tariffs, with Trump taking a series of symbolic and provocative actions against Canada. On Truth Social, he accused Canada of maintaining an “unacceptable” exchange rate and posted a map of North America overlaid with the US flag, including Greenland. Earlier, Trump signed an executive order renaming Lake Ontario “Lake America,” a gesture that was widely rejected by Canadians. Additionally, Trump has threatened to block sales of Canadian aircraft manufacturer Bombardier in the US unless the company shifts its manufacturing operations to the country. Bombardier, one of Canada’s largest employers, contributes over C$7 billion to the national GDP annually, according to a report by PwC. The US has already imposed a 25% tax on Canadian cars and trucks, along with tariffs on steel, aluminum, and lumber. In late August, Trump introduced new 50% tariffs on Canadian goods such as dairy, alcohol, hockey sticks, and perfume. These measures have sparked concern among economists, who warn that the latest counter-tariffs will likely increase costs for consumers on everyday items like clothing, food, and furniture. The Canadian Chamber of Commerce has urged the government to adopt a more targeted approach to retaliation, emphasizing the need to avoid prolonged escalation. “Businesses understand retaliation but don’t want to see endless escalation,” said the chamber’s CEO, Candace Laing, in a statement to the BBC. Public opinion in Canada appears largely supportive of the retaliatory measures, with polls suggesting the majority of citizens back the government’s stance. However, the economic implications remain a subject of debate. While the Canadian government has pledged a $5.42 billion support package for affected small and medium-sized businesses and workers, the long-term effects of the trade war on both economies remain unclear. As the situation unfolds, businesses on both sides of the border continue to adjust to the shifting landscape of trade relations.