Ottawa: Canada has imposed new tariffs on about C$27.6 billion worth of goods from the United States, while the administration of President Donald Trump has announced new import bans and other trade measures against Canadian products.
The latest actions have sharply increased tensions between the two countries and have added to uncertainty for businesses on both sides of the border.
Canada's new counter tariffs took effect at 12:01 a.m. on September 8. They range from 15 per cent to 50 per cent and cover US products in sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics.
The Canadian government said the measures match US tariffs on certain Canadian goods and are intended to respond to the impact of US trade measures on Canadian industries.
The value of the goods covered by Canada's latest tariffs is about C$27.6 billion, or roughly US$20 billion. The tariffs apply to goods originating in the United States and were introduced after the US imposed new tariffs on Canadian goods.
Washington responded with further measures on September 8.
The Trump administration announced that certain Canadian alcoholic beverages, dairy products and motorcycles will be barred from entering the United States from September 29.
The United States has also changed the products covered by some of its existing tariffs on Canadian goods. Some additional tariffs will take effect on September 15, while the new import bans will begin on September 29.
The White House said the measures were a response to what it described as continued discrimination by Canada against American commerce.
The US administration has particularly criticised Canadian policies affecting American dairy products, alcoholic beverages and motor vehicles.
Trump has also directed the General Services Administration to work with the US Trade Representative to take steps to remove Canadian origin products from its Multiple Award Schedules. These schedules are used by the US government to buy goods and services from approved suppliers.
The measure would affect Canadian products in US government procurement unless Canada provides what the Trump administration calls full and fair access for American farmers and companies.
Canada has rejected the US position and has defended its decision to impose the new tariffs.
Prime Minister Mark Carney suspended formal trade negotiations with the United States on August 21. His government said the terms being sought by Washington were unacceptable and that Canada had to protect its economic interests.
The United States has accused Canada of breaking off negotiations and failing to address what Washington considers unfair treatment of American goods.
The two sides therefore give different accounts of why the negotiations broke down. These claims remain disputed and should be treated as positions of the respective governments.
Despite the dispute, officials from the two countries remain in contact. Canadian Trade Minister Dominic LeBlanc and US Trade Representative Jamieson Greer have continued communicating, although there is no new comprehensive trade agreement.
The latest dispute follows earlier US action against Canadian goods.
On August 22, the United States brought into effect a 50 per cent tariff on about C$27.6 billion worth of Canadian goods under measures targeting what Washington described as unfair treatment of American commerce.
Canada's latest counter tariffs were introduced in response to those measures.
The growing trade dispute is important for both economies because Canada and the United States have closely connected supply chains and large volumes of goods move across their shared border.
The dispute is also creating uncertainty about the future of the United States Mexico Canada Agreement, known as USMCA. The agreement remains in place, but the continuing use of tariffs and other trade restrictions has increased uncertainty around North American trade.
Canada is also seeking to reduce its dependence on the US market. Carney has said the country needs to strengthen trade with other countries and build a more diversified economy.
Another unresolved issue is the automobile sector. The Trump administration has indicated that further action could affect Canadian automobiles and automotive parts in the future.
Those possible future measures should not be confused with the specific import bans announced on September 8, which are scheduled to begin on September 29.
For now, the two governments remain under pressure to find a way back to negotiations. Canada is seeking to protect its industries and expand trade beyond the United States, while Washington is using tariffs and import restrictions to pressure Ottawa over its trade policies.
The latest measures show that the dispute has moved beyond a disagreement over tariffs. With additional US measures due to take effect later this month, businesses and governments on both sides of the border will be watching closely for the next developments.