Canada announces US$20 billion retaliatory tariffs on US goods, unveils support measures

On August 25, 2024, Canada announced a series of retaliatory tariffs on US goods totaling US$20 billion, as part of an escalating trade war between the two nations. These tariffs, ranging from 15 to 50 percent, will come into effect on September 8, a date previously announced by Prime Minister Mark Carney. The retaliatory measures target a variety of US products, including steel, dairy, and electronics, with industries such as frozen and fresh fish, consumer goods like dishwashers and washing machines, and industrial materials like railway construction materials, all affected.

In response to the US tariffs, Canada has unveiled a C$7.5 billion (US$5.4 billion) aid package to support businesses and workers. Industry Minister Melanie Joly called on Canadians to back local enterprises, vowing to collaborate with new allies and trading partners. Should the US raise US tariffs on Canadian automobiles to 50 percent, Canada is prepared to fight back.

Canadian exports to the US constitute 70 percent of its overall total, making it the United States' second-largest trading partner in goods this year, behind Mexico. The retaliatory tariffs are projected to raise the US effective tariff rate on Canadian exports by 1.8 percent, primarily driven by increased duties on plastics, electrical machinery, and wood and paper products. Manufacturers in Quebec, New Brunswick, and Ontario are expected to be most impacted by the new tariffs.