Canada Fires Back with Counter-Tariffs on Over 700 US Products Amid Escalating Trade War

Trade negotiations between Canadian Prime Minister Mark Carney and United States President Donald Trump collapsed in recent days, prompting Canada to announce retaliatory tariffs against the United States as the trade war between Ottawa and Washington escalates, impacting hundreds of products.

On Tuesday, the Canadian government stated it would impose tariffs on 27.6 billion Canadian dollars, or $19.9bn, worth of US goods, matching “dollar for dollar” the new US duties introduced by President Donald Trump. A new financial support plan for businesses caught in the trade war was also revealed.

According to a government statement, the counter-tariffs will impact more than 700 products, targeting the steel and aluminium, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics sectors. Ranging from 15 percent to 50 percent, the tariffs are set to take effect on September 8. Additionally, the Canadian government announced a new 7.5 billion-Canadian-dollar ($5.42bn) funding package to help small- and medium-sized businesses mitigate financial risks caused by the new duties.

Negotiations Deteriorate

The new counter-tariffs follow action from US President Donald Trump, who imposed 50 percent tariffs on Canadian products on Saturday—impacting $20bn worth of Canadian goods—only days after announcing a trade deal. On Monday, President Donald Trump announced new tariffs on Canadian autos, doubling existing rates to 50 percent effective January 1.

President Donald Trump has also hurled insults at Canada in recent days, stating on Tuesday that he was considering renaming Lake Ontario – the easternmost of the Great Lakes bordering the Canadian province of Ontario – to “Lake America”. The US president additionally referred to Prime Minister Mark Carney as “Governor Carney”, echoing longstanding remarks about annexing Canada as the “51st state”.

On Tuesday, President Donald Trump claimed in a post on Truth Social that the US lost $60bn to Canada annually over the last decade. However, Canada maintains a trade surplus with the US of 9.9 billion Canadian dollars ($7.1bn), according to Statistics Canada. Al Jazeera reached out to the White House for clarification but did not receive a response.

US Consumers Feel the Pinch

The impact of US tariffs is expected to be felt directly by US businesses and consumers. While cars and auto parts have been exempt from the tariffs imposed on Saturday, they remain a point of contention between Washington and Ottawa. Canada serves as the largest purchaser of US-made cars, a dynamic that could place pressure on American carmakers relying on Canadian demand.

Meanwhile, US households could face higher prices on 550 consumer goods imported from Canada due to the 50 percent tariff enacted by President Donald Trump. Affected products include ice skates, toilet paper, some alcoholic beverages, and paint. According to a report from the Kiel Institute for the World Economy, an economic think tank, these measures could drastically affect Americans, as US importers and consumers absorb 96 percent of the tariff burden.

Markets React

The price of gold, widely considered a safe investment during periods of economic uncertainty, trended upwards after falling nearly 1 percent earlier on Tuesday, remaining largely flat and down only 0.03 percent at $4,696 per ounce. The US dollar remained fairly stable, dipping 0.04 percent on Tuesday to 98.96, while the Canadian dollar index rose comparably by 0.04 percent to 72.27.

On Wall Street, the Nasdaq rose 0.5 percent, the Dow Jones Industrial Average remained flat, and the S&P 500 gained 0.2 percent. In Toronto, the S&P/TSX Composite Index increased by 0.6 percent.