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Trump retaliated against Canada’s counter-tariffs on $20bn worth of US imports by banning $1bn of Canadian goods.
How far will the US-Canada trade war go?
The United States is implementing a ban on nearly $1bn in imports from Canada, including alcoholic beverages, dairy products and motorcycles.
The ban took effect early Tuesday and is likely to further strain already-tense relations between the two neighbours.
Ottawa and Washington DC have long been allies and trade partners, with approximately $880bn worth of annual two-way trade. That relationship has been upended during US President Donald Trump’s second term as he unleashed tariffs on most trading partners, including Canada, and referred to the northern neighbour as the 51st state of the US.
Most recently, the US slapped 50 percent levies on Canadian goods worth $20bn, including dairy and motorcycles, on August 22 after trade negotiations failed. Canadian Prime Minister Mark Carney retaliated, saying Ottawa will match US tariffs “dollar for dollar in order to protect Canadian workers, farmers, families and businesses”. Canada levied tariffs of 15 percent, 25 percent and 50 percent on US exports of a similar value.
Tuesday’s ban was Trump’s punishment for Canada’s retaliatory tariffs.
“The impact of such a ban will be minor, it is only $1bn while we trade hundreds of billions with Canada,” Professor Gary Shields at Wayne State University’s School of Business told Al Jazeera. “It is, however, rather astonishing how President Trump treats our allies in Canada and Europe, while rolling out the red carpet for China’s dictator when he visited the US last week”.
“It is a tit-for-tat. It will not reduce people’s taxes and won’t put money in their pockets. It is kind of personal and a way of showing off toughness,” Shields added.
Canada’s economy grew by an estimated 0.2 percent in August after remaining unchanged in July, according to Statistics Canada. But the new US-Canada tariffs, tighter financial conditions and a shrinking population should further weaken growth in late 2026 and early 2027, Michael Davenport, senior Canada economist at Oxford Economics, said in a note provided to Al Jazeera.