Canada and the US Are Taxing Each Other's Stuff: Here's What's Going On

Canada will impose new taxes on nearly 900 American products starting September 8, 2026. These taxes, called tariffs, range from 25% to 50% and will be charged on goods entering Canada from the United States. The list includes everything from industrial metals to everyday items like cosmetics and toilet paper (Guardian; PBS NewsHour).

A tariff is a tax a government places on goods coming in from another country. The idea is to make those foreign products more expensive, which can push people to buy locally instead. When one country adds tariffs, the other often responds with its own — and that back-and-forth is called a trade war.

Prime Minister Mark Carney vowed to match US tariffs "dollar for dollar" after trade talks between the two countries broke down. The September 8 measures are the latest step in a trade war that has grown from affecting $95 billion in annual trade to $155 billion, now covering US lumber, plastics, farm products, cars, and trucks (ISED Canada, April 2026; ISED Canada, August 2026).

The United States started the latest round by placing a 50% tariff on Canadian goods, including paper products like envelopes, cigarette paper, and toilet paper. Trump used an old law from the Great Depression era to impose these tariffs (Spectrum News). The US has also placed 50% tariffs on Canadian liquor brands like Crown Royal and Canadian Club (Guardian).

The toilet paper situation shows why these tariffs are complicated. The US bought $328 million worth of toilet paper from Canada in 2024, making Canada the biggest supplier to the US by far. Even toilet paper made in American factories often uses raw materials shipped from Canada. Procter & Gamble, the company behind Charmin, said in 2025 that it would have to raise prices because of earlier tariffs (Guardian).

Americans use a lot of toilet paper. The US makes up just 4% of the world's population but accounts for more than 20% of global tissue use. The average American goes through 141 rolls a year, more than anyone else in the world — Germans come second at 134 rolls (Guardian). So when a 50% tariff raises the cost of Canadian wood pulp that feeds American paper mills, those costs travel all the way to the grocery store shelf, and companies cannot easily find replacement suppliers.

Canada's response has been building in layers. US steel, aluminum, and copper products face 50% tariffs. American cars and trucks face 25% tariffs. Most Canadian provinces have also banned American alcohol on their own. Trump then used those alcohol bans as a legal reason to add even more tariffs on Canada, creating a cycle where each side's response becomes the other side's justification for going further (Guardian; Department of Finance Canada).

The law Trump used to impose these tariffs matters for how long they might last. It is a statute from the Great Depression era that gives the president broad power to block imports by citing national security or emergencies, without going through Congress. That means the tariffs can be put in place quickly, but taking them down also depends on the president's decision alone — not on a formal treaty that lawmakers would vote on. Canada has designed its tariffs to match US rates, so they could be lifted together if the US lowers its own. Whether Washington sees it that way is the big open question.

The broader context here is that the US and Canadian economies are deeply connected. Many products cross the border multiple times before they reach a consumer — parts are made on one side, assembled on the other, then sold back across. The $155 billion in tariffs, on top of the earlier $95 billion, does not just raise prices at the store. It forces companies to find new suppliers. Canadian alcohol distributors are already looking outside the US. American toilet paper makers cannot quickly replace Canadian raw materials. And the 50% tariff on Canadian liquor hits a market where Canadian government-run stores control distribution, meaning US distillers lose their biggest customer.

For anyone tracking the practical impact, September 8 is the key date. Goods already on their way, contracts set at older prices, and supply deals with clauses that cover government actions all face changes in the coming days. The full list of affected products is on the Department of Finance website, with specific tax rates for each item.