OTTAWA: Canada introduced new retaliatory tariffs on $20 billion worth of U.S. products shortly after escalating a trade dispute with its largest trading partner as negotiations broke down last month. Prime Minister Mark Carney’s government imposed the measures as both countries struggle to reach a new agreement and tensions continue to grow.
The new duties range from 15% to 50% and affect a wide variety of American products, including steel, furniture, clothing and electronics. The move represents a major increase in Canada’s response to U.S. trade measures and could add further pressure to economic ties between the neighboring countries.
Canadian and U.S. officials have blamed each other for the failure of negotiations. The growing dispute has also raised concerns about the future of the United States-Mexico-Canada Agreement (USMCA), which faces annual reviews after U.S. President Donald Trump rejected extending the agreement for another 10 years.
“What we are worried about is an escalatory spiral,” said Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance and a member of Carney’s advisory committee on bilateral U.S. economic relations.
“But at the same time, we totally understand that the Prime Minister needs to find areas of leverage," Harvey said.
U.S. tariffs target Canadian products:
Trump’s tariffs introduced last month affected several Canadian industries, including wine, furniture, dairy, cement, clothing, fishing equipment and hockey gear. Those measures covered about $20 billion, or roughly 5%, of Canada’s exports to the United States.
Government figures from both countries show that nearly 68% of Canada’s total exports this year have gone to the United States. About 80% of those shipments were previously exempt from tariffs under the USMCA, providing some protection for Canada’s economy. However, the latest U.S. tariffs were introduced under an older U.S. law dating back to the Great Depression and do not provide Canada with the same USMCA exemptions.
The uncertainty surrounding the trade agreement has increased concerns over Canadian investment and economic growth, particularly as Canada confronts an economy about 13 times larger than its own.
Carney said last week that Canada remained prepared to reach a trade agreement that would benefit both countries. Trump has also threatened to increase U.S. tariffs on Canadian cars, trucks and auto parts to 50% starting Jan. 1. He also signed an executive order changing the name of Lake Ontario to Lake America.
