Canada imposes $20 billion US tariffs as trade talks collapse
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Canada announced 50% tariffs on $20 billion of American goods after negotiations with the United States broke down, while the United States imposed matching duties on Canadian exports.
Canada said it will levy 50% tariffs on about $20 billion worth of U.S. goods, including steel, aluminum, dairy, electronics and farm equipment, starting September 8. The move follows the United States' decision on August 21 to impose 50% tariffs on roughly $20 billion of Canadian products after talks on a broader trade agreement collapsed.
Ottawa had been seeking a deal that would reduce tariffs and preserve cross-border supply chains, particularly in the automotive and steel sectors. U.S. negotiators, according to Canadian officials, altered the terms at the last minute, demanding that Canada match U.S. tariffs on China and give Washington a role in future Canadian trade deals.
"Canada is a trading nation. If we align perfectly with the Americans — primarily about China — we then end up sacrificing our trade policy," said Dan Ciuriak, senior fellow at the Centre for International Governance Innovation.
Ciuriak added that the smaller country bears the brunt of such disputes, citing the 2023 Chinese retaliation of 100% tariffs on Canadian canola after Canada matched U.S. duties on Chinese electric vehicles. He argued that an independent trade policy is essential for Canada.
A recent Angus Reid Institute poll found that roughly 75% of Canadians support the government's tougher stance, despite concerns about economic impacts. Government data show a decline of about 500,000 trips to the United States in the first quarter of 2026, with Canadian spending on U.S. travel down by $800 million.
Economists warned of modest macroeconomic effects: the Royal Bank of Canada estimated a 0.4% GDP impact, while a University of Calgary scholar projected up to 90,000 job losses in a no-deal scenario.
International observers are watching the dispute, as other nations have generally pursued tariff reductions in exchange for market access. China remains the only major economy that has directly matched U.S. tariff threats.
Prime Minister Mark Carney, speaking at the World Economic Forum in Davos, urged middle powers to cooperate, noting that exclusion from trade negotiations could leave them vulnerable.
The United States has also threatened higher duties on Canadian autos, trucks, parts and steel unless production shifts to the U.S., and it declined to extend the United States-Mexico-Canada Agreement for another 16 years, opting instead for annual reviews.
Canadian lawmakers are exploring alternative markets and reconsidering procurement decisions, including a pause on the purchase of additional U.S.-made F-35 fighter jets.
"When your friend kicks you in the back, one of the first rules is you don't then go and buy $12 billion of fighter jets from that person," said British Columbia Premier David Eby.