U.S. 50% Tariff Threat on Canadian Goods Could Ripple Through Canada’s Economy
The United States announced a possible 50% tariff on a range of Canadian products, prompting Canadian officials and economists to warn of modest growth impacts and potential job losses, while suggesting the move may be a negotiating tactic.
The United States announced on Monday that it could impose 50% tariffs on a broad list of Canadian goods, with the measures slated to take effect on Aug. 19. The proposed duties would cover items such as honey, liquor, cement, dairy, certain wood products, hockey sticks, essential oils, perfumes, candles, dog leashes and wigs, while excluding energy products, potash, fish and critical minerals. The tariffs would also affect goods previously exempt under the United States-Mexico-Canada Agreement, which the United States has not renewed, prompting a new round of trade talks that could extend to 2036.
Prince Edward Island Premier Rob Lantz said the tariffs create uncertainty, noting, >“We’re living in a time when uncertainty is the new norm.”
Randall Bartlett, deputy chief economist at Desjardins, estimated the duties would hit about $28 billion (C$19.8 billion) of Canadian exports to the United States each year, roughly 5% of U.S. imports from Canada. He warned the tariffs could shave two to three-tenths of a percent off Canada’s growth in 2026-27 and keep investment on the sidelines, suppress hiring and dampen consumer spending and residential investment.
Fen Osler Hampson, a professor of international affairs at Carleton University, said the affected products are ones U.S. consumers could forgo if prices rise, potentially leading to layoffs at firms employing 10-200 workers, which he described as the “backbone of the Canadian economy.”
Dennis Barby, president and CEO of Canadian Manufacturers and Exporters, said the tariffs would raise costs, disrupt production and make North America less competitive, according to a company release.
British Columbia Premier David Eby expressed frustration that the United States is proposing tariffs while seeking investment in Canadian mines, adding that Canada may need to limit access to those resources if the stance persists.
Both Bartlett and Hampson suggested the tariffs might be a bargaining tool and may not ultimately be implemented. Hampson cautioned against retaliatory measures, warning, >“You don’t want to poke the bear… we’re the smaller economy. They can absorb a hit much more than we can.”
Analysts noted the move reflects heightened tensions between the Trump administration and Canadian Prime Minister Mark Carney, which have intensified since Carney’s criticism of Trump at the World Economic Forum in Davos.