Canada Hits Back With $27.6-Billion in Counter-Tariffs on U.S. Goods

The federal government will impose counter-tariffs on $27.6-billion worth of American products starting Sept. 8, in retaliation for the 50-per-cent tariffs U.S. President Donald Trump placed on roughly $28-billion in Canadian goods over the weekend after trade negotiations collapsed late Friday (The Globe and Mail).

A tariff is a tax on imported goods, paid at the border. When one country raises tariffs on another's products, the affected country often responds with its own duties on the first country's goods — what economists call retaliatory or counter-tariffs. The goal is to apply political pressure by making the other side's exports more expensive for its own consumers.

Prime Minister Mark Carney suspended trade negotiations with the United States following the breakdown and pledged dollar-for-dollar retaliation (Reuters). Finance Minister François-Philippe Champagne told reporters the counter-tariffs are "dollar-for-dollar and rate-for-rate" and will protect workers, farmers, families and businesses (The Globe and Mail).

Ottawa is targeting more than 700 U.S. items. Most carry levies of 25 or 50 per cent, with a small number subject to a lower 15-per-cent tariff. Canada raised duties on steel and aluminum, along with many products made from those metals, to 50 per cent from the existing 25 per cent. After steel and aluminum, the largest tariff hits fall on machinery and mechanical appliances, paper and paperboard, electrical machinery and seafood. The list also reaches consumer goods: dishwashers, refrigerators, furniture, lighting, golf clubs, motorcycles, video game consoles and smartphones (The Globe and Mail).

On the American side, Trump's new 50-per-cent tariffs cover electronics, plastics, paper, furniture and home appliances, among other Canadian products. The measures reach approximately 5 per cent of Canadian exports, with the damage concentrated in Ontario, Quebec and British Columbia. Canadian industries considered vulnerable to the new U.S. tariffs include softwood lumber (The Globe and Mail; Reuters).

Alongside the tariff response, Ottawa outlined a $7.5-billion support package of new and enhanced measures for workers and businesses, including easier access to Employment Insurance and business loan programs (The Globe and Mail). This comes on top of the more than $25 billion earmarked in Budget 2025 for workers and businesses affected by U.S. tariffs and trade disruptions (Government of Canada.

The current round of retaliation builds on measures Canada first imposed on March 13, 2025, when Ottawa levied 25-per-cent tariffs on $29.8 billion in U.S. imports. Those initial counter-tariffs followed the U.S. "Liberation Day" tariff announcements in early April 2025, which triggered retaliatory duties from several countries (Global Affairs Canada; Government of Canada). Ottawa had also extended temporary tariff relief, or remission, until June 30, 2026, for all U.S.-origin goods used in Canadian manufacturing (Department of Finance Canada). Remission is a mechanism that lets importers apply for a refund or reduction of duties on specific goods.

A Bank of Canada study of Ottawa's earlier retaliatory measures against the United States found that prices for targeted items rose by roughly 6 per cent, with about a quarter of the 25-per-cent tariff passed through to end consumers. At the peak of the price shock, the counter-tariffs added approximately 0.3 per cent to headline inflation (The Globe and Mail). Those findings reflect the previous round of 25-per-cent duties; the escalation to 50 per cent on key categories will test whether consumer pass-through scales proportionally or whether importers absorb a larger share at the higher rate.

The broader context here is the compression of the escalation timeline. When Canada first imposed retaliatory tariffs in March 2025, the U.S. duties were at 25 per cent and the two sides were still at the negotiating table. The jump to 50-per-cent American tariffs, applied over a weekend after talks collapsed Friday, removes the prospect of a negotiated off-ramp before Sept. 8, when Canada's response takes effect. The CUSMA framework — the trade agreement that replaced NAFTA in 2020 — exempts Canadian automobile and auto parts exports from U.S. Section 232 tariffs (national-security duties), meaning the auto sector is not directly exposed to the latest U.S. measures even as metals, machinery and consumer goods bear the brunt (Global Affairs Canada).

For affected businesses, the two-week window before the counter-tariffs come into force on Sept. 8 is the operative consideration. Importers of the targeted U.S. goods will need to weigh the remission program, which covers manufacturing inputs, against the new duties on finished consumer products. The $7.5-billion support package and the Budget 2025 allocations together signal that Ottawa is preparing for a sustained period of mutual escalation rather than a quick resolution. The Bank of Canada's inflation findings from the earlier round suggest the consumer impact, while measurable, was modest at 0.3 percentage points; the move to 50-per-cent rates on both sides of the border will provide a stiffer test of that relationship.