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The Trump administration imposed an additional 50 percent tariff on roughly C$28 billion of Canadian goods effective Aug. 22 following the collapse of trade talks with Canada the previous week according to Reuters reporting. Canada announced dollar-for-dollar counter-tariffs on an equivalent value of US products ranging from steel to agricultural equipment with those measures scheduled to take effect on Sept. 8 Prime Minister Mark Carney’s office stated. The latest escalation builds on earlier US levies targeting Canadian steel aluminium lumber and autos that have been in place since shortly after President Donald Trump returned to the White House in January 2025 the Royal Bank of Canada assessment found.
Ontario has sustained the heaviest impact from the sectoral tariffs with multiple auto parts and assembly facilities announcing production cuts and layoffs since early 2025 the Financial Accountability Office of Ontario reported. The province could see 119,200 fewer jobs overall by the end of 2026 compared with a no-tariff baseline largely in manufacturing which would contract 8 percent that year according to the office’s projections. Metal exports from Quebec fell 36 percent between February 2025 and February 2026 while sector employment declined 3.6 percent Statistics Canada data released in July showed and University of Calgary economist Trevor Tombe estimated the newest tariffs could place nearly 90,000 Canadian jobs at risk if sustained.
Canada’s retaliatory duties will fall most heavily on US exports from swing states such as Ohio Illinois and Pennsylvania Statistics Canada trade figures indicate. Ohio stands to lose duties on C$3.2 billion or 12 percent of its exports particularly in steel and laundry machines while Illinois faces pressure on farm and construction equipment tied to firms like John Deere Scotiabank economist Derek Holt observed. Although the US economy will absorb a smaller overall hit than its neighbour non-partisan US analyses have already linked the broader Trump tariff programme to tens of thousands of lost positions in manufacturing transportation and warehousing the Center for American Progress reported.
Canada’s real GDP expanded at a 3.3 percent annualized rate in the second quarter of 2026 after a revised 0.3 percent gain in the first quarter marking the strongest performance since 2023 Statistics Canada data released Aug. 28 showed. Exports jumped 3.6 percent in the quarter led by a rebound in passenger vehicles and energy products while final domestic demand rose 1 percent after a prior contraction the agency noted. Foreign direct investment reached a record C$96.8 billion in 2025 the highest level since 2007 helping to cushion some trade-related pressures even as Oxford Economics projected the combined new tariffs would trim 0.3 percentage points from Canadian GDP growth in 2027.
Some Canadian companies have accelerated efforts to diversify away from the US market which still accounts for more than 70 percent of national exports according to long-standing Bank of Canada statistics. Toronto-based menswear manufacturer Outclass began attending trade shows in Paris instead of New York allowing it to cultivate European clients amid the dispute owner Matteo Sgaramella told the BBC. “The reception has been amazing” Sgaramella said adding that “We’re kind of seen as the one country that’s kind of standing up to the Americans right now” while the Canadian Chamber of Commerce identified Ontario cities including Oshawa London and Kitchener-Cambridge-Waterloo as especially exposed because of their limited success in building non-US sales.
The dispute has raised the average effective US tariff rate on Canadian imports from 2.9 percent in June 2025 to 5.7 percent now surpassing the rate applied to Mexico according to Royal Bank of Canada calculations. Economists at the Canadian American Business Council warned that a complete breakdown of the USMCA would cost Canada C$271 billion in GDP over a decade and more than 100,000 jobs while the United States would lose US$1 trillion and 214,000 positions in a similar scenario. Prime Minister Carney has committed to doubling non-US exports over the coming decade as Ottawa prepares to host an investment summit in Toronto in September to attract fresh capital the Prime Minister’s Office stated.
