Canada hits U.S. goods with new tariffs as trade fight widens

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Canada raises tariffs on U.S.

Highlights

Canada imposed tariffs of 15% to 50% on U.S. goods.
Many U.S. steel products now face a 50% Canadian tariff.
The measures target about the same trade value as recent U.S. duties.

The new duties took effect at 12:01 a.m. New York time and include a 50% tariff on many U.S. steel products, up from 25%, alongside levies on motorcycles, cosmetics, cheese, and other goods, Bloomberg reported. Ottawa says the countermeasures are intended to strengthen its negotiating position after the U.S. imposed 50% tariffs on about $20 billion worth of Canadian goods in August.

Retaliation raises pressure on U.S. exporters

The Canadian measures are likely to hit exporters in states with close commercial ties to Canada, including Michigan and Ohio. The timing also adds a political dimension, with both states hosting competitive races ahead of the U.S. midterm elections.

The dispute has intensified since bilateral negotiations collapsed last month. The two sides had appeared close to a preliminary agreement in August, but the talks broke down during final negotiations, followed by public criticism from officials in both governments.

Washington has already signaled that additional measures remain possible. U.S. officials have discussed further tariffs and potential import restrictions, while President Donald Trump has separately threatened to block sales of Bombardier aircraft in the U.S.

Canada is targeting roughly the same value of American goods as the U.S. measures affect on the Canadian side.

Economic costs are rising on both sides

The trade fight is putting additional pressure on a deeply integrated North American economy, particularly in autos, metals, and manufacturing. Canadian employment growth has already been weak this year, averaging only about 3,400 jobs per month, while layoffs have been more concentrated in industries that rely heavily on U.S. demand.

Oxford Economics estimates that the combined effect of U.S. tariffs, Canadian retaliation, and related government support measures could reduce Canadian output by about 0.3% compared with its baseline forecast.

The risk is that another round of tariffs would deepen that drag and increase costs for companies operating across the border.

A wider trade war remains the main risk

Canada is betting that higher costs for U.S. businesses will eventually push Washington back toward negotiations, but the strategy carries significant downside. The two countries remain tightly linked through automotive supply chains, steel, agriculture, and aerospace, making prolonged retaliation costly for both.

With no new talks scheduled and the U.S. threatening further action, the dispute could broaden quickly. Any expansion into autos or additional industrial products would raise the economic stakes well beyond the current tariff package.

Earlier, we reported that Canada and EU advance strategic partnership.

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