Canada imposed retaliatory tariffs on American goods just after midnight Tuesday, escalating economic pressure on its largest trading partner after negotiations collapsed last month.
The move deepens a trade conflict that has already dragged on for 18 months, with neither side currently showing much appetite for retreat.
The Canadian duties cover about $20 billion worth of US products.
Tariff rates range from 15% to 50% and apply to steel, furniture, clothing, electronics, and a broad collection of other goods crossing the northern border.
Ottawa designed the measures as dollar-for-dollar retaliation against tariffs previously imposed by President Donald Trump.
The escalation arrived after officials from both countries blamed one another for wrecking an agreement that appeared close to completion just two weeks earlier.
“What we are worried about is an escalatory spiral,” said Michael Harvey, executive director of a Canadian agricultural trade group and a member of Prime Minister Mark Carney’s advisory committee on bilateral US economic relations.
His concern reflects the obvious danger of two closely connected economies steadily piling costs onto each other.
“But at the same time, we totally understand that the prime minister needs to find areas of leverage,” Harvey said.
That is the political calculation facing Carney as he tries to look tough without inflicting lasting damage on Canadian businesses and consumers.
Trump’s latest tariffs targeted roughly $20 billion in Canadian exports, representing about 5% of the goods Canada sends to the United States.
Products affected include wine, furniture, dairy products, cement, clothing, fishing rods, and hockey equipment, because apparently even hockey gear cannot escape a trade brawl.
Government data from both countries shows that Canada has sent nearly 68% of its total exports to the United States this year.
About 80% of those shipments entered duty free because of protections and exemptions included in the US Mexico Canada trade agreement.
Those protections have given Canada’s domestic economy some breathing room during the dispute.
The new US tariffs, however, were imposed through a Depression era law that does not permit Ottawa to claim the usual agreement exemptions.
The growing confrontation is creating fresh uncertainty about the future of the continental trade pact.
Trump declined to extend the agreement for another decade, leaving it subject to annual reviews and raising questions for companies considering investments in Canada, Mexico, or the United States.
Canada is also taking on an economy approximately 13 times its size, a reality that no amount of patriotic rhetoric can erase.
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Carney may enjoy broad public support now, but political analysts warn that enthusiasm could fade once higher costs, disrupted supply chains, and weaker growth reach Canadian households.
American voters are hardly cheering the tariffs either.
A Reuters and Ipsos survey found that only 20% of Americans approved of Trump’s tariffs on Canadian goods, giving both governments another reason to find a workable exit before the economic pain becomes more visible.
Carney said last week that his government remains prepared to sign an agreement benefiting both countries.
Yet the fresh retaliatory duties suggest Ottawa believes added pressure is necessary before Washington returns to the negotiating table.
Trump raised the stakes again last month by threatening to increase tariffs on all Canadian cars, trucks, and automotive parts to 50% beginning January 1.
He also signed an executive order renaming Lake Ontario as Lake America, adding another theatrical flourish to an already combustible dispute.
A Canadian government source said ministers and government officials are not currently holding talks with their American counterparts.
That silence leaves businesses guessing while tariffs take effect and political leaders trade blame from opposite sides of the border.
“The Canadian government needs to keep channels open to the United States and not go overboard in terms of rhetoric and reacting to the rhetoric from the American side, while waiting for the American decision-making process to come back to economics,” Harvey said.
For now, those channels appear quiet as both governments test how much economic pressure the other side will tolerate.
The central risk is that tariffs intended as leverage become permanent barriers that neither government can remove without looking weak.
With billions of dollars in commerce exposed and the broader trade agreement facing uncertainty, Canada and the United States are moving deeper into a costly standoff that could prove far easier to start than to stop.
