Canada just announced new tariffs on US goods. Here’s how the growing trade war could hurt Americans

Originally Published: 25 AUG 26

Updated: 25 AUG 26

By Elisabeth Buchwald, CNN

(CNN) — On September 8, Canada is set to enact tariffs ranging from 15% to 50% on over 700 American goods in an effort to match US tariffs dollar for dollar, Canadian officials announced today.

Notably, Canada is doubling its duties on US steel and aluminium to 50%, in line with the 50% tariffs the US had already imposed on Canadian steel and aluminium before the latest round of US tariffs. Canadian officials framed the move as a means of protecting Canadian manufacturing.

The duties the US recently imposed on Canadian goods “will have real consequences for Canadian workers, businesses, and communities across our nation,” Canadian Finance Minister François-Philippe Champagne said in a press conference on Tuesday. “Canada must respond, and today we are in a proportionate, targeted, and strategic way.”

Canadian Industry Minister Mélanie Joly suggested that the levies were selected with upcoming US midterm elections in mind. “We’re also targeting products that will target states in the US. And so we’re being wise and strategic to put political pressure, and that’s why we think it’s the right thing to do right now,” she told reporters on Tuesday.

These types of retaliatory tariffs are just some of the arrows Canada has in its quiver in a growing trade war with the United States.

Beyond tariffs, Canada also has other tools at its disposal, including restrictions on key exports to the United States.

Here’s what Canada is doing now, what could come next — and what each move could mean for Americans.

The first move: tariffs

Besides steel and aluminium, the retaliatory tariffs are concentrated on sectors such as paper products, construction materials, home appliances and agricultural products, including dairy and seafood.

In total, the latest American tariffs cover about 5% of the goods the US imported from Canada last year, while Canada’s tariffs cover about 6% of the goods the US exported to Canada, according to US trade data.

Overall, Canada is the second-largest export market for American goods and is among the top destinations for many of the goods targeted by the new import duties.

For example, Canada was the largest export market for US household appliances last year, purchasing more than $1 billion worth of the goods, most of which will now face a 25% tariff.

In announcing the retaliatory actions, Canadian officials also unveiled a $7.5 billion CAD (around $5.4 billion USD) package to support domestic businesses harmed by the new duties.

The risk for Americans here is that steep Canadian tariffs could weaken demand for these goods, which could force employers to cut workers’ hours or, in some cases, resort to layoffs.

“The majority of these goods have been picked as they have readily available domestic alternatives, in an effort to hurt American businesses while minimizing the hit to Canadian consumers and industry,” Bradley Saunders, North America economist at Capital Economics, said in a note on Tuesday.

The bigger weapons

Trump already signalled he may go beyond the latest tariffs in his trade fight with Canada, threatening on Monday to double tariffs on Canadian cars and auto parts to 50% starting January 1.

And in another sign of the growing rift between the new nations, President Donald Trump threatened to rename Lake Ontario to Lake America. “I deal with many countries, and Canada is easily the most difficult and unreasonable,” Trump said in a Truth Social post.

Trump suggested in a brief call with CNN’s Jim Sciutto that the US had added conditions in the 11th hour.

“That sounds like me,” Trump responded when asked about Canadian officials’ assertions that the US made late-stage demands, adding, “they have to pay a fair amount. And if they don’t pay a fair amount, we won’t make a deal. That’s fine.”

If Trump follows through on auto taxes — or escalates in other ways — Ottawa could use other ammunition.

Canada could restrict key exports to the US, such as energy and a key fertiliser ingredient known as potash, said Diamond Isinger, a policy strategist and former special advisor on Canada-US relations to Prime Minister Justin Trudeau.

Another vulnerable area is electricity. Ontario Premier Doug Ford said in an interview published Monday that Canada should be prepared to cut off electricity exports to the United States if the trade war worsens, putting a potentially powerful weapon on the table. Ontario supplies electricity to several US states, including New York, Michigan and Minnesota.

Carney echoed Ford on Monday, telling reporters that “nothing is off the table.”

Any such moves could add to the price pressures Americans have faced this year. Altogether the cost of living is up 3.4% from a year ago, according to July Consumer Price Index data. Gas prices, up almost 25% compared to last year, have weighed heavily on consumers’ finances. The cost of powering homes is also up, with electricity and piped gas both costing around 4% more annually.

For now, Joly said officials won’t take pre-emptive action to combat the auto tariff threat. But if Trump does proceed, Canada will act, she said.

How badly will it hurt?

Tariffs could make it harder for US companies to sell their goods in Canada.

Restrictions on energy, electricity or critical minerals, something Ford also floated, could instead raise costs for American companies and consumers by making key inputs more expensive or harder to obtain.

For instance, last year, Ontario briefly applied a 25% surcharge on electricity imports to the United States. The Ontario government estimated at the time that it would affect 1.5 million American homes, costing up to $400,000 CAD (around $280,000 USD) “every day the surcharge remains in place.”

Restrictions on these key Canadian goods could quickly be felt by US businesses and consumers, making it harder to stay afloat, Isinger said.