U.S. tariffs on Canadian imports raise prices and strain jobs

President Donald Trump’s tariffs on roughly $20 billion of Canadian imports are affecting trade flows and consumer costs on both sides of the border. U.S. steel, aluminum, lumber and automobile producers that rely on the American market have seen exports fall, with steel shipments halved and lumber exports about 20% below 2024 levels, according to the Bank of Canada. The reduced output has contributed to job losses in the hardest-hit sectors.

Canadian households are also feeling higher costs. Government data show consumer prices were 3% higher in August than a year earlier, with grocery prices up 2.8% and transportation costs rising 7.5%. Prices for goods subject to the tariffs – including groceries, household items, furniture, electronics and appliances – increased about 6% more than comparable untariffed products, the central bank reported.

"The Trump administration is complaining about dairy access and, generally speaking, those complaints are completely valid," said David Clement, North American affairs manager at the Consumer Choice Center. Clement added that Canada imposes high tariffs on U.S. chicken, turkey, eggs, cheese and milk, and noted that differences in market access stem from separate trade agreements such as the USMCA negotiated during Trump's first term.

Scott Lincicome, vice president of general economics at the Cato Institute, said more than 99% of U.S.–Canada trade was duty-free before 2025 and that negotiators have historically tolerated disputes over politically sensitive products to preserve the broader relationship. "The Trump administration has so far refused to make the deal," he said, adding that free trade in fertilizer, energy and lumber helps keep costs down for American farmers, homebuilders and consumers.

Lincicome warned that the combination of tariffs and rising energy prices – partly linked to the conflict in Iran – creates a "double whammy" for consumers, as higher diesel costs raise the price of transporting goods. He described higher diesel prices as functioning like another tariff by increasing the cost of getting products to buyers.

Despite the tensions, Clement cautioned that the Canada-U.S. partnership remains one of the world’s strongest trading relationships and should be reinforced rather than weakened.