Canada tariffs on US goods take effect amid trade war: What to know

Canada’s retaliatory tariffs on an array of U.S. goods went into effect on Tuesday , marking the latest chapter of a weeks-long trade war between the two countries.

The “ dollar for dollar ” levies — ranging from 15 percent to 50 percent — impact American products such as milk and cream, steel, aluminum, paper and agricultural equipment.

The Canadian government imposed the tariffs in response to President Trump’s 50 percent import taxes on $27.6 billion worth of goods from America’s second-largest trading partner that went into effect last month. Trump’s move came after trade talks between Canadian and U.S. officials broke down .

Here is what to know about the retaliatory levies.

The new Canadian tariffs are “concentrated” in specific sectors — such as steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics, per the country’s Department of Finance .

Overall, there are 648 items on a list of tariffed items on the department’s website. But there are many repeated products, with only slight differences noted. For instance, the department lists fresh cheese and grated or powdered cheese as two different items.

Not every American product on the list faces a levy of 50 percent. Certain items — such as hand tools, air conditioners and forklifts — will face 15 percent tariffs when Canadian businesses import them from the U.S.

Other products — such as cheese and curd, paper and paperboard, stoves and radiators — will face 25 percent import taxes.

The Canadian government is also increasing tariffs on U.S. steel and aluminum from 25 percent to 50 percent. Last year, American steel products accounted for 36.2 percent of steel imports by Canada, the most of any country, according to data from the Commerce Department’s International Trade Administration.

Canadian Prime Minister Mark Carney said in a video message his office released Tuesday that the tariffs “are necessary to protect our workers, protect our companies, and our communities” while Trump’s levies remain in effect.

“We can’t let American goods into Canada tariff-free while they charge our companies to export,” Carney added.

The tariffs, while impacting more than $20 billion worth of U.S. goods, still leave many American products exempt. Last year, Canadian businesses imported $333.6 billion worth of goods from the country’s neighbor to the south, according to data from the U.S. Census Bureau.

The annual value of U.S. exports to Canada, in fact, has not dipped below $250 billion since 2010, per the bureau.

As for whether the trade war will cause further inflation, analysts from JPMorgan Chase said last week the levies are not “yet widespread enough” to do so.

“The tariffs as they stand are a Canadian regional manufacturing story — hitting Quebec and Ontario hardest — not a U.S. macro story,” noted Joe Seydl, a senior markets economist at JP Morgan Private Bank.

Carney also advised that his government would provide “targeted help” to sectors hardest hit by the tariffs, naming autos, forestry, steel and aluminum.

Last month, the Canadian Department of Finance unveiled a new $7.5 billion assistance package for workers and businesses impacted by the trade war, on top of the $25 billion in support it has already provided.

The former package includes $1.5 billion for small and medium-sized firms to “manage the pressures” related to the tariffs and a $500 million liquidity stream to help businesses manage their cash flow.

“We’re putting real support behind the businesses and people caught in the middle of this fight — a fight they didn’t start,” Carney said in Tuesday’s message, adding his government “will do whatever it takes, for as long as it takes” for workers and businesses impacted by the trade war.

If the trade war broadens, though, it could have damaging consequences for both economies.

Referencing Trump’s proposed 50 percent tariffs on Canadian cars scheduled to take effect in the new year, the JPMorgan Chase analysis stated those tariffs could increase prices for consumers by decreasing supply or increasing repair times.

“What would make autos meaningfully more concerning for the economic and inflation outlook is less the headline tariff rate and more the story behind it,” the analysis states, adding the impacts of the levies partially depend on whether they apply to components and parts or just finished vehicles.

Trump has shared more maximalist rhetoric over the last two days, first by threatening to ban Canadian aerospace company Bombardier from selling its products in the U.S.

That garnered pushback from Kansas GOP Sens. Jerry Moran and Roger Marshall, as Bombardier is a major employer in their state.

“I will continue working to see that Bombardier’s manufacturing operations not only remain in Kansas but continue to grow and create American jobs,” Moran wrote on social media Monday.

Then on Tuesday, the president directed his administration to remove Canadian products from the General Services Administration’s (GSA) Multiple Award Schedule “unless Canada restores full and fair reciprocity” for American farmers and companies.

The GSA’s Multiple Award Schedule affords state, local and tribal governments access to certain products at what it says are affordable prices.

Carney, meanwhile, hinted at a new era for Canada on trade. The Canadian prime minister said his country “ relied too much ” on the U.S. over the past four decades, adding, “It’s clear that time is over.”

The second-year prime minister remarked, “Our plan, since I came into office, has been development and diversification. Not denial, waiting to go back to some good old days, and not continued dependence. For the past year and a half, we’ve been steering our economy towards trusted partners.”