Canada's retaliatory tariffs on US goods, valued at approximately $20 billion, took effect on Tuesday morning. The tariffs, which range from 15% to 50%, cover over 700 US products including steel, aluminum, dairy products, household appliances, agricultural equipment, pulp and paper, and electronics, among others. 

Canadian Prime Minister Justin Trudeau said this move is intended to counteract the "unjustified and unprovoked tariffs" imposed by the US. The Canadian government also announced a C$7.5 billion (about $5.4 billion) relief package for businesses and workers affected by the trade dispute.

The day before the Canadian tariffs came into effect, on September 7, US President Donald Trump threatened to ban Canadian aircraft manufacturer Bombardier from selling in the US unless its production line is moved to the US. Trump claimed that Bombardier generates over 50% of its revenue from the American market, while Canada "blocks American banks and businesses," hindering US company Gulfstream's operations in Canada. Bombardier responded that its supply chain involves 2,800 suppliers in the US, with an annual procurement value of over $25 billion.

In the first joint review of the United States-Mexico-Canada Agreement (USMCA) on July 1, 2026, the United States rejected a 16-year extension of the pact. As a result, the agreement remains in force until its scheduled expiration in 2036 but will now be subject to annual joint reviews. The agreement covers approximately $1.6 trillion in annual trade among the three countries.

On August 21, US-Canada trade negotiations broke down at the last moment. Canadian Prime Minister Mark Carney announced the suspension of talks and recalled the negotiating delegation. Hours later, the US imposed a 50% tariff on hundreds of specific Canadian goods — including wine, hockey sticks, and cement — valued at approximately $20 billion, effective August 22. Following the breakdown, Trump further announced that, effective January 1, 2027, he would impose a 50% tariff on Canadian cars, parts, and steel. 

In terms of trade flows, Canada is accelerating its diversification efforts. In July 2026, exports to the US decreased by 6.6% compared to the previous month, with the US share of total Canadian exports falling to 66.3%, according to Statistics Canada. During the same period, exports to non-US markets increased by 7.4%, reaching C$25.62 billion, marking the third consecutive month of growth and setting a new record. The main growth markets were the Netherlands, China, and Germany. The Canadian government has set a target to double exports to non-US markets by 2035.

The impact of US tariffs on Canada is more pronounced at the political level than in economic terms, Gong Jiong, professor of economics at the University of International Business and Economics, told CGTN. He noted that bilateral trust has been undermined, public hostility has risen, and the US has even called Canada the "51st state". Therefore, the dispute over sovereignty and autonomy is the fundamental obstacle in bilateral relations, and Canada is prepared to hold its ground on this issue.