Canada’s latest retaliatory tariffs against the United States took effect at midnight, escalating a trade fight between two economies with deeply intertwined supply chains.
Why it matters: The new measures double existing Canadian tariffs on imported U.S. steel and aluminum products and cover roughly 700 products, including aluminum foil, railway locomotives and steel bridges. Canada had announced retaliatory tariffs on about C$20 billion of U.S. imports beginning Sept. 8.
- President Trump added to the tensions Monday, threatening to block Montreal-based aircraft manufacturer Bombardier from selling jets in the United States unless the company begins building them in America.
- Bombardier already has a significant U.S. presence, including roughly 3,500 employees and more than $2.5 billion in annual spending with American suppliers.
Uneven Fight: Treasury Secretary Scott Bessent has argued that Canada is at a major disadvantage in a prolonged trade fight because the U.S. economy is substantially larger. But Canada still has significant economic ties to the United States.
- U.S. Census Bureau data show America exported about $333.6 billion in goods to Canada in 2025, making the Canadian market an important destination for American producers.
- Canada also has considerable exposure to U.S. financial markets. Treasury data show Canadian investors held $468.3 billion in U.S. Treasury securities at the end of 2025, ranking Canada among the largest foreign holders.
The bottom line: Canada may be the smaller economy, but Ottawa is signaling it isn’t prepared to simply back down. With tariffs rising on both sides and Trump now threatening individual Canadian companies, the dispute risks becoming more costly for businesses and consumers on both sides of the border.