Canada hits back with tariffs as US trade war escalates

Canada has announced retaliatory tariffs of up to 50% on C$27.6 billion (US$19.94 billion) worth of American goods, escalating a trade war with the United States after negotiations collapsed last week. The counter-tariffs, effective September 8, cover more than 700 product categories including steel, dairy, appliances, and electronics, matching the US duties "dollar for dollar, rate for rate" Source: SCMP, DW. Prime Minister Mark Carney said the US demands aimed to "destroy our major industries," and that Canada rejected a "bad deal" Source: DW. The US tariffs, imposed Saturday, hit about $20 billion of Canadian exports, roughly 5% of Canada's exports to the US Source: AP News.

The reaction

The breakdown has deepened the rift between the longtime allies. US President Donald Trump threatened to double tariffs on Canadian autos to 50% starting January 1, 2027, and floated renaming Lake Ontario to "Lake America" Source: AP News, SCMP. Ontario Premier Doug Ford threatened to cut electricity exports, saying Trump could "kiss my ass" Source: CNA. Canadian provinces have also banned American alcohol, hitting California wine exports, which fell 35% in 2025, with 80% of that decline attributed to Canada Source: LA Times.

What's next

Analysts see an off-ramp, noting the tariffs cover only a small share of trade and that Carney's retaliation is delayed until September 8, providing time for talks Source: AP News. Meanwhile, Canada is seeking closer ties with the EU, with Carney pledging "intense discussions" on a deeper economic and security partnership Source: Euronews. The trade war has also prompted Amazon to shift some Canadian sourcing from the US to China to avoid tariffs, as it expands delivery in Canada Source: The Next Web.