As was widely expected, following actions taken by the United States to implement additional 50% tariffs on certain Canadian goods “in response to Canada’s discriminatory treatment of American products,” under Section 338 of the Tariff Act of 1930, that went into effect on August 22, the Canadian government retaliated today, in the most recent sign of escalating trade tensions between the North American neighbors, with various tariffs on U.S. goods.
“The Government of Canada has negotiated intensively and in good faith with the United States (U.S.) toward a fair and comprehensive trade agreement that would protect Canadian workers and their families, strengthen the economy, provide greater certainty for businesses, and respect Canada’s sovereignty,” stated the Department of Finance Canada. “In recent days, however, the U.S. proposed new terms that were not in Canada’s best interest, basically, asking too much of Canada, and offering too little in return. Canada therefore suspended negotiations rather than accepting a bad deal that would undermine Canadian workers, businesses, strategic sectors, and our national interest. Canada did not choose this trade conflict, but we need to respond to provide a level playing field to our businesses.”
Canada said that, effective September 8, counter-tariffs on various U.S. goods will go into effect, at 15%, 25%, and 50% on products drawn from those targeted by U.S. Section 338 and Section 232 tariffs, noting that the rate for each product will match the corresponding U.S. rate.
And it added that these counter-tariffs will apply to products covering $27.6 billion in U.S. imports, “and will focus on sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, that are most impacted by U.S. tariffs.” Looking at different sectors, Canada said that goods subject to 50% counter-tariffs include steel and aluminum products that were previously at a 25% counter-tariff, furniture, clothing, and apparel.
And it also said that goods subject to 25% tariffs include appliances, dairy products, such as cheese, fish and seafood, and certain steel and aluminum derivative products. Other existing counter-tariffs against the U.S., including autos, remain in place and Canada’s tariff remission framework also remains available to assess requests for exceptional relief.
“Canada will match the new U.S. tariffs dollar for dollar,” Canadian Prime Minister Mark Carney said in a social media post. “In addition, we are introducing $7.5 billion in new and enhanced measures to support Canadian workers and businesses. That builds on the nearly $25 billion in supports introduced since the implementation of the U.S. unjustified tariffs. Defending Canadian jobs, industries, and families.
The tariffs placed by the U.S. on Canada, which took effect on August 22, are on products ranging from cement, electronics, and packaging materials to furniture, dairy products, and industrial equipment. They apply to roughly 5% of Canadian exports to the United States.
The White House has not released a consumer-friendly product list, but officials said the tariffs apply across a broad range of Canadian goods. Examples include: industrial machinery; commercial refrigeration equipment; cement and other building materials; wine, beer and distilled spirits; hockey sticks and other sporting goods; and certain dairy products and ingredients.
The official proclamations identify affected products using Harmonized Tariff Schedule codes rather than plain-language product names.
Canadian exports that are exempt from the new U.S. tariffs include: energy products; potash; critical minerals; fish and seafood; and goods already covered by Section 232 tariffs, including steel, aluminum, copper and many auto parts.
Prior to the new U.S. tariffs on Canada taking effect on August 22, the White House pointed to various declines in U.S. exports to Canada as a driver for the new tariffs.
As examples, it observed that exports of U.S. motor vehicles fell 22%, or $5.6 billion, from April 2025 through March 2026 compared to the same period over 2024 to 2024, while exports of motor vehicles from other countries into Canada have gone up, offsetting the previous demand that came from the U.S. And for alcoholic beverages, it said that with the exception of two Canadian provinces and territories, all others have ceased the purchase, distribution, or retailing of U.S. alcoholic beverages and have not imposed similar restrictions on other countries. For the period from March 2025 to February 2026, the White House said that From April 2025 through March 2026, Canadian imports of U.S. motor vehicles decreased by approximately 22%, or $5.6 billion, compared to the same period in 2024-2025. Exports of motor vehicles from other countries to Canada have increased to meet the demand previously filled by U.S. exports.
All but two Canadian provinces and territories have halted the purchase, distribution, or retailing of U.S. alcoholic beverages, and have not imposed similar restrictions on other countries. From March 2025 through February 2026, Canadian imports of U.S. alcoholic beverages decreased by about 81%, or $582 million, compared to the same period in 2024-2025.
Andrew Caridas, a partner at Washington, D.C.-based Ashurst Perkins Coie, whom has more than two decades of experience advising clients on international trade regulations, said prior to the negotiations reaching a stalemate, the most important takeaway is that the new Section 338 duties apply regardless of whether goods qualify under USMCA.
“Companies that previously had largely ignored USMCA and its predecessor NAFTA—because U.S. duties on Canadian products were low in any event—have spent six years building compliance programs around origin certification, and that certification does not help here,” said Caridas. “A shipment can be fully USMCA-originating and still carry the additional 50% duty.”
And he added that another thing to keep in mind for shippers is that coverage depends on HTS code, not broadly by industry. There are roughly 554 eight-digit HTS classifications across the three proclamations, and the motor vehicles action in particular reaches well beyond vehicles: cement, furniture, fishing rods, hockey equipment.
In a research note, Chris Rogers, Head of Supply Chain Research, at S&P Global Market Intelligence, observed that the talks held between the U.S. and Canada were about more than only the Section 338 tariffs, with the USMCA negotiations also now on hold, which extends supply chain investment uncertainties for shippers.
“It is unlikely that USMCA will be abandoned given the importance to both sides, including an expected 63.6% of Canada’s non-energy exports and 18.0% of U.S. non-energy exports in 2027, although Canada’s export economy is steadily becoming less reliant on the U.S.,” stated Rogers.
Supply Chain 24/7 Editorial Director Andy Gray contributed to this report.
