US-Canada Trade War Escalates Again! Canada Announces "Equivalent Retaliation"—Up to 50% Tariffs to Be Imposed on About $20 Billion Worth of US Goods

According to Zhitong Finance APP, the Canadian government has announced a new round of large-scale retaliatory tariffs on U.S. goods, in response to the new tariffs imposed last weekend by U.S. President Trump on Canadian products. Canadian Prime Minister Carney has adopted a "dollar-for-dollar retaliation" strategy. The new measures will cover about $20 billion worth of U.S. imports, while also launching a C$7.5 billion corporate assistance program to support Canadian businesses impacted by the U.S.-Canada trade war.

According to the measures announced by the Canadian government, Canada will double the existing retaliatory tariffs on U.S. steel and aluminum products to 50%. Meanwhile, U.S.-made furniture, clothing and apparel products, video game consoles, smartphones, and other electronic products will also be subject to a new 50% tariff.

This new round of retaliatory measures is scheduled to take effect on September 8.

The U.S. goods covered by this round of Canadian retaliatory tariffs have an annual import value of about $20 billion, roughly the same scale as the trade volume affected by the Trump administration’s new tariffs on Canadian goods announced last Saturday. This represents about 6% of Canada’s total imports from the U.S. last year.

In addition to certain goods facing a high 50% tariff, Canada will also implement countermeasures with different rates on other U.S. goods. Among them, U.S. goods including household appliances, cheese, fish, seafood, and some steel and aluminum derivative products will face a 25% tariff; a range of U.S.-made machinery, industrial tools, and agricultural equipment will face a 15% tariff.

Canadian government officials stated that the main goal of these measures is not to increase government revenue through tariffs, but to help Canadian businesses affected by U.S. tariffs maintain their domestic market share by increasing the cost of imported U.S. competitive products.

This large-scale retaliation also signals a significant shift in Carney's government’s stance toward Trump’s trade policies. A year ago, in an effort to improve U.S.-Canada relations and bring both parties back to the negotiating table, Carney cancelled Canada’s retaliatory tariffs on a large number of U.S. goods. Since then, Canada has also made concessions in several areas including digital policy, hoping to eventually reach a new trade agreement with the United States.

However, trade talks between the two countries broke down last Friday.

On Monday, Carney said he had become increasingly clear that U.S. officials are attempting to undermine Canada’s key industries such as steel, aluminum, and automobile manufacturing. In a press release announcing the countermeasures, the Canadian government stated that the U.S. had made new demands during the negotiations, which were not in Canada’s best interests, essentially "asking too much from Canada while offering too little in return."

This has prompted the Canadian government to shift from its previous negotiation and concession-focused strategy to a more direct tariff-based retaliation.

In addition to imposing retaliatory tariffs on U.S. goods, the Canadian government also announced a C$7.5 billion (about $5.4 billion) enterprise support plan to alleviate the impact of the trade war on domestic businesses and the job market.

Some of the funds will go toward expanding the existing corporate assistance programs introduced last year. New support measures include liquidity support for SMEs affected by the trade conflict, funding for companies impacted by U.S. tariffs to accelerate their investment and transformation projects, and extended and enhanced flexibility for employment insurance plans in affected industries.

These policies are intended to help Canadian businesses maintain cash flow, investment, and employment in the face of rising export costs and declining orders due to U.S. tariffs.

Before the introduction of this Canadian countermeasure, the U.S. and Canada were close to reaching a new trade agreement, but negotiations ultimately broke down last Friday, after which the Trump administration quickly rolled out a new round of tariff measures.

Now, by choosing to implement retaliation of roughly the same trade amount, Canada is escalating the trade friction between the two sides, which is beginning to spread from traditional dispute areas such as steel, aluminum, and automobiles to a broader range of goods, including consumer electronics, apparel, furniture, food, and industrial equipment.

Overall, Canada’s roughly $20 billion retaliatory tariffs are essentially matching the scale of the new U.S. tariffs, while the C$7.5 billion enterprise aid plan provides a buffer for domestic industries.

As the new tariff plan takes effect on September 8, the U.S.-Canada trade dispute is shifting from weeks of negotiations back to direct tariff confrontation. Whether both parties will return to the negotiating table in the future, and whether the tariff measures will expand further, will become key factors affecting the outlook for Canada’s manufacturing sector, cross-border supply chains, and North American trade.