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By Kate Nalepinski
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Canada on Wednesday announced a set of retaliatory tariffs against the United States, raising economic tensions between the two nations in response to newly imposed U.S. tariffs on Canadian goods.
The initial tariffs introduced by President Donald Trump included higher duties on steel, aluminum, and other products, which Canada has countered with significant trade penalties. These developments mark a shift from the trade policies of 2024 and could disrupt industries on both sides of the border.
Why It Matters
Canada and the U.S. share one of the world's largest trade relationships, with goods and services exchanged daily. The imposition of tariffs threatens key industries, raises consumer costs, and risks economic instability.
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Canada is one of America's trading partners poised for what the Trump administration calls reciprocal tariffs, from April 2.
Canada Tariffs On US Goods In 2024
Canada maintained tariffs on U.S. imports last year, largely adhering to the framework established under the U.S.-Mexico-Canada Agreement (USMCA).
Trump alluded to implementing higher tariffs for other countries in October 2024. At the Economic Club of Chicago, he called "tariff" the "most beautiful word in the dictionary." Tariffs became part of his 2024 presidential campaign message.
U.S. Census Bureau data shows that in 2024, the U.S. spent $412,695,700,000 on imports from Canada, which affected goods such as steel, aluminum, and agricultural products. In the same year, the U.S. spent $349,359,900 on exports from Canada.
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The USMCA, which Trump signed in 2018 during his first presidential term, alongside Canadian Prime Minister Justin Trudeau and Mexico's then-President Enrique Peña Nieto, significantly increased the quota of U.S. dairy products sold to Canada without tariffs.
Earlier this month, Trump referenced these tariffs on Truth Social and accused Canada of "cheating" American dairy farmers.
In theory, inflated dairy tariffs can be charged on American dairy sold to Canada that exceeds the quota. However, the tariffs are never charged in practice because American dairy is not exported to Canada outside of the quota limits, according to the Brookings Institution think tank.
Canada's Current Tariffs on US Goods
As of March 12, Canada implemented $21 billion in retaliatory tariffs as a trade war continues. The move comes after Trump said he would double steel and aluminum tariffs to 50 percent in response to a spat over the Canadian electricity supply.
Ontario Premier Doug Ford said he would impose a 25 percent tariff on electricity going to America in response to Trump's trade war. He had even threatened to cut it off entirely. But both sides had backed off after negotiations.
If U.S. tariffs remain in place, Canada has pledged to escalate additional countermeasures, potentially increasing duties on additional U.S. goods.
According to the Canadian government, this response is necessary to protect domestic jobs and industries from what it describes as "unjustified" U.S. trade actions.
On Sunday, Mark Carney, the new Canadian prime minister, said, "The Canadian government is rightly retaliating with our own tariffs. My government will keep our tariffs on until the Americans show us respect—and make credible, reliable commitments to free and fair trade."
Canada Retaliatory Tariffs List
Canada's retaliation tariffs, set to take effect on Thursday, are aimed at steel and aluminum products.
However, additional imported U.S. goods, worth over $9 billion when converted from Canadian to U.S. dollars, are included. The plan targets computers, sports equipment, and cast iron products, according to Canadian Finance Minister Dominic LeBlanc.
If the trade dispute escalates, additional goods, including electric vehicles, beef, pork, dairy products, and electronics, may be subjected to tariffs.
Why Has Donald Trump Implemented Tariffs?
The Trump administration has justified its tariffs as a strategy to address border security concerns and protect American industries. The new tariffs, imposed under the International Emergency Economic Powers Act, aim to curb illegal border crossings and drug trafficking, according to a press release from the White House.
Trump has said more tariffs are coming for Canada, and on April 2, the U.S. is expected to implement reciprocal tariffs worldwide.
As tensions escalate, both countries appear unwilling to back down, raising concerns about the broader implications for North American trade and economic growth.
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