What tariffs will really cost Canadians and Americans
Households and businesses have become used to tariffs impacting the cost of living for more than year now, so what will change now?
A series of new tariffs announced during the ongoing trade war between the US and Canada have significant implications for both countries. Recently, Prime Minister Mark Carney of Canada imposed retaliatory import taxes on various US goods in response to the Trump administration's threats to raise tariffs. If Trump's proposed 50% tariff on Canadian vehicles from January 2027 materializes, it could further harm the automotive industry.
Cars, trucks, and parts are among the major traded goods between the US, Canada, and Mexico, with the supply chain stretching across borders. Although car dealerships have absorbed the initial costs, they are now wearing thin. Yaros predicts that higher import costs to the US could accelerate manufacturers' shift towards luxury cars, SUVs, and trucks, raising prices in the used-car market.
Carney has not matched Trump's 50% tariff threat yet, but a 25% import tax on specific American vehicles has been in place since last year. Canada has also imposed tariffs on construction materials like steel, aluminium, and lumber, which could increase building costs and push up home prices. The Forest Products Association of Canada warns that tariffs will raise costs on both sides of the border.
The US imports $23 billion worth of wood products annually, with nearly half coming from Canada. However, the lumber trade dispute between the nations is not new. Tariffs on household items such as carpets, washing machines, furniture, fridges, and even kitchenware are also targeted by Canada. Saunders suggests that consumers may turn to domestic alternatives, as these goods are fungible.
The Budget Lab at Yale anticipates marginal increases in furnishing and other household equipment for Americans due to tariffs on lumber and other materials. The impact on alcohol prices is uncertain, but Canada banned US alcohol sales last year in response to previous tariffs, and the ban is likely to return as the trade war escalates.
Higher tariffs can affect consumers directly and, more significantly, impact businesses with cross-border supply chains, potentially leading to job losses in key industries like forestry.
Written by urgent.news from BBC World's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
