Canada imposed retaliatory tariffs of up to 50% on nearly $20 billion worth of U.S. goods on Tuesday, escalating a trade dispute that experts say is raising costs and uncertainty across deeply integrated North American supply chains.

The measures took effect just after midnight Tuesday and apply to roughly C$27.6 billion ($20 billion) in U.S. imports. Rates range from 15% to 50%, broadly mirroring the duties President Donald Trump imposed on Canadian products after trade negotiations between Washington and Ottawa collapsed in August, according to the CBC.

Hundreds of American products are now subject to the new duties, including steel, aluminum, clothing, furniture, dairy products, household appliances and industrial equipment. U.S. milk, golf clubs, steel, aluminum, jackets and T-shirts face the 50% rate, while cheese, toilet paper and some air conditioners are taxed at 25%. Forklifts and industrial molds fall under the 15% tier, the BBC reported.

The countermeasures add another layer of costs for manufacturers, retailers and transportation providers moving freight across one of the world's largest bilateral trading relationships. U.S.-Canada trade totaled nearly $900 billion in 2025.

Canada's new tariffs cover about 8% of its imports from the United States. Steel, aluminum and furniture manufacturing are expected to experience some of the largest effects, with printing, paper, pulp, clothing and textiles also facing significant exposure.

A calibrated response

The duties follow Trump's decision to impose 50% tariffs on approximately $20 billion in Canadian imports after negotiations between the two countries broke down. Canadian Prime Minister Mark Carney has characterized his government's response as "dollar-for-dollar," seeking to pressure Washington while limiting damage to Canadian companies and consumers.

That balancing act has already forced adjustments. Fresh fish and lobster initially appeared among the targeted products but were later removed after objections from Canada's seafood industry, reflecting the tightly interconnected supply chains between the two countries.

Businesses brace for higher costs

Canadian business groups have warned that retaliation could further raise costs for companies already dealing with U.S. tariffs. The Canadian Federation of Independent Business said about 40% of its small-business members that export goods are selling products now subject to 50% U.S. tariffs, and the organization expects Canada's retaliation to affect an even larger share of its membership.

The CFIB said the widening trade fight is likely to increase economic uncertainty and prices, and it called on Ottawa to expand assistance for affected small businesses.

Economists have issued similar warnings, noting that Canadian tariffs could lift prices for businesses and consumers because the duties are collected on U.S. products entering Canada. Ontario and Quebec could be particularly exposed given their concentration of manufacturing industries and dependence on U.S. trade.

The Canadian Chamber of Commerce has urged Ottawa to keep its retaliation targeted.

"Businesses understand retaliation but don't want to see endless escalation," Candace Laing, the chamber's president and CEO, said in a statement cited by the BBC, adding that companies are preparing for the dispute to continue.

Washington weighs another response

U.S. Trade Representative Jamieson Greer said Tuesday that Washington could consider additional retaliatory tariffs against Canadian goods. Greer and Canadian Trade Minister Dominic LeBlanc were expected to speak Tuesday about the U.S. response and potential next steps, according to Radio-Canada.

Trump has also threatened to block Canadian aircraft manufacturer Bombardier from selling planes in the United States unless the company moves manufacturing south of the border, according to the Associated Press.

Bombardier pushed back by highlighting the extent of its U.S. supply chain. The Montreal-based manufacturer said it works with about 2,800 U.S. companies across 47 states, including suppliers producing business-jet wings in Texas and flight-control components near Los Angeles. Its U.S. operations and supply chain support tens of thousands of jobs, the company said.

The new duties on goods moving north could reshape sourcing and freight flows while adding costs for manufacturers and importers on both sides of the border.

Source: FreightWaves