US, Canada trade war deepens as Ottawa slams $20bn retaliatory tariffs on US goods

Canada has announced retaliatory tariffs on about C$27.6 billion ($19.9 billion) worth of United States goods, escalating the trade war with President Donald Trump.

The Canadian government said the new tariffs will match the US duties dollar-for-dollar and rate-for-rate, with tariffs of 15%, 25%, and 50% taking effect on September 8.

The measures target more than 700 categories of American products, including steel, aluminium, dairy products, appliances, agricultural equipment, furniture, clothing, seafood, electronics, pulp and paper.

Canada’s Finance Minister François-Philippe Champagne said Ottawa had negotiated with Washington in good faith but rejected what he described as US demands that asked too much of Canada while offering too little in return.

“We did not choose this trade conflict,” the Canadian government said, insisting that the countermeasures were necessary to protect Canadian workers, farmers and businesses.

The retaliation follows Washington’s decision to impose 50% tariffs on about $27.6 billion worth of Canadian goods, which came into effect on August 22 after trade negotiations between the two countries collapsed.

The latest confrontation marks a sharp deterioration in relations between the two countries whose economies are deeply interconnected.

The US and Canada maintain highly integrated supply chains across the automotive, manufacturing, agricultural and energy sectors. Businesses on both sides of the border now face higher costs and uncertainty over future trade.

Trump has also threatened to impose 50% tariffs on Canadian cars, trucks and auto parts from January 1, 2027, adding further pressure on Ottawa.

Canadian Prime Minister Mark Carney has defended his government’s decision to retaliate, saying Canada must protect its economic interests while continuing to seek a negotiated solution.

Ottawa has also announced a C$7.5 billion support package for workers and businesses affected by the US tariffs. The package includes assistance for small and medium-sized businesses, support for companies facing cash-flow problems and measures to help workers affected by the trade dispute.

The Canadian government acknowledged that the retaliatory measures could increase costs for some consumers and businesses, but said the primary objective was to protect domestic industries from the impact of US tariffs.

The escalation comes after months of increasingly tense trade relations between Washington and Ottawa. Previous disputes have already resulted in tariffs and counter-tariffs targeting steel, aluminium, automobiles, and other goods.

With both countries now imposing fresh duties, businesses are warning that prolonged trade restrictions could disrupt cross-border supply chains and increase prices.

The latest measures have therefore raised fears of a wider US-Canada trade war, with both governments under pressure to protect their economies while avoiding further damage to one of the world’s most important trading relationships.

(BBC)