By Rajwa Quasim
Canada has imposed retaliatory tariffs on $20 billion worth of U.S. goods as talks between the two countries stalled, escalating an 18-month trade dispute. The tariffs took effect after midnight Tuesday.
Canada’s countertariffs cover roughly $20 billion worth of U.S. goods, nearly 6% of what the U.S. exported to Canada last year. The duties range from 15% to 50% and will affect goods including steel, aluminum, furniture, clothing, cosmetics and electronics. Tariffs on steel, aluminum and iron products have doubled to 50%.
Canada has described the measures as a “dollar-for-dollar” response to U.S. tariffs imposed Aug. 22 on the same value of Canadian goods, including wine, dairy, cement, clothing, fishing rods and hockey equipment.
The economic stakes are particularly high for Canada because of its dependence on the U.S. market. About 68% of Canadian exports have gone to the U.S. this year, with 80% of those exports moving duty-free under the United States-Mexico-Canada Agreement (USMCA).
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For Americans, the impact could extend beyond higher prices for imported goods. The two countries are closely integrated in sectors including manufacturing, agriculture and auto production.
Canada had earlier included fish and lobster on the tariff list, but later excluded them following pressure from the country’s seafood industry.
The trade deal stalled in August after three days of talks in Washington between Canada’s Minister of International Trade Dominic LeBlanc and U.S. Trade Representative Jamieson Greer failed to produce an agreement.
A senior U.S. official said the U.S. offer would have given Canada the lowest tariffs among major exporters to the U.S. However, Canada sought further concessions, particularly on steel, aluminum, autos and softwood lumber.
Greer said, “Canada declined to finalize the trade deal under the terms agreed earlier this week. This is a missed opportunity for Canada to partner with the United States, which is the fastest-growing economy in the G7.”
Trump has now threatened to increase U.S. tariffs on Canadian cars, trucks and automotive parts to 50% starting Jan. 1, 2027. The president has also threatened to halt business with Bombardier, a Canada-based aircraft maker, unless the company moves its manufacturing to the U.S.
As the deal stalled, Canadian Prime Minister Mark Carney said last month, “They (negotiators) have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute. However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.”
Carney further said Washington had introduced last-minute restrictions on Canada’s freedom to strike trade deals with other countries.
READ: Trump plans fresh tariffs on 60 countries (July 21, 2026)
Beyond tariffs
The dispute between the two neighbors has escalated beyond trade negotiations. Eight Canadian provinces restricted U.S. alcohol sales, causing American spirits exports to Canada to fall by more than 70% compared with a year earlier.
In an executive order in August, Trump renamed Lake Ontario as “Lake America,” a name that is not recognized by Canada but has been adopted by Google and Apple for U.S. users. Trump’s repeated remarks about Canada becoming the “51st state” have further strained relations between the two countries and their people.
In response, Carney said Canada is not for sale.
Travel from Canada to the U.S. has also fallen sharply, with new data showing a 25% decline in 2025 as trade disputes and political tensions remain heightened between the neighboring countries.
Carney has said talks can resume “when Americans stop doing memes, stop throwing shade, stop trying to be tough and start getting serious.”