Canada braces for prolonged trade war as counter-tariffs on US take effect

Canada implemented retaliatory tariffs on a range of US goods on Tuesday, with no indication of a trade deal in sight. These counter-tariffs will apply to nearly C$28bn ($20bn; £15bn) worth of American products, including steel, furniture, and cotton T-shirts, with rates reaching up to 50%. Fresh fish and lobster were initially on the list, but Canada later removed them following pressure from its seafood industry.

Prime Minister Mark Carney expressed the desire for a durable and mutually beneficial deal, stating that Canada is ready to engage again when the US is prepared. US Trade Representative Jamie Gries noted that Canada had been presented with an excellent deal, which was rejected, and suggested that the US may retaliate by banning imports of certain Canadian products.

Meanwhile, US President Donald Trump threatened to halt all US business with Canadian airplane manufacturer Bombardier unless it relocated production south. Canada and the US share the world's largest bilateral trading relationship, valued at nearly $900bn in 2025. The new US tariffs and Canadian counter-tariffs have left businesses on both sides scrambling to adapt.

While polls show the majority of Canadians support the retaliatory tariffs, economists warn that the measures will lead to higher prices for consumers on everyday goods such as clothing, food, and furniture. The Canadian Chamber of Commerce has urged Prime Minister Carney to take a targeted approach to retaliation, cautioning against an endless escalation.