Tensions between the US and Canada have escalated since President Donald Trump's return to the White House just over 18 months ago, initiating a global programme of tariffs. Canada was among the first countries targeted by the Trump administration and has reciprocated with its own measures.
The US has applied tariffs to key Canadian sectors including steel, aluminium, lumber, and automobiles. Last week, an additional 50% levy was imposed on Canadian goods valued at approximately C$28bn ($20bn; £15bn).
In response, Canada announced its own 'dollar-for-dollar' and 'strategic' counter-tariffs on American goods, designed to match the US tariffs, which will come into effect on 8 September.
The ongoing dispute has had varied impacts. Ontario, Canada's most populous province with a significant manufacturing sector, has been hardest hit by auto and steel tariffs, leading to layoffs and production cuts. Quebec's metal exports also saw a 36% decline between February 2025 and 2026.
In the US, the swing state of Ohio is projected to be most affected by Canada's counter-tariffs, with C$3.2bn (12%) of its exports, particularly steel and laundry machines, facing new taxes. Illinois and Pennsylvania are also expected to feel significant impact.
The average effective US tariff rate on Canada has nearly doubled to 5.7%, up from 2.9% in June, now surpassing Mexico's rate and approaching those faced by countries like the UK and Vietnam. Despite this, some Canadian businesses are adapting by seeking new markets outside the US.