A Short History of the Canada US Tariffs War

A Short History of the Canada US Tariffs War by Maj (ret’d) CORNELIU, CHISU, CD, PMSC FEC, CET, P.Eng. Former Member of Parliament Pickering-Scarborough East We are fast approaching a difficult deadline in negotiations in the tariff war between Canada and United States. In a couple of days we may be in for a shattering awakening. The United States has recently made preliminary agreements with Japan and the European Union for a tariff of 15%. However, for the moment, Canada is still being threatened with a 35% tariff and no signs from President Trump that he may eventually lighten the load. Was he deliberately mocking us when he stated a few days ago that Canada is not a priority for him? Surely, he jests. The 2025 Canada–United States tariff war marks one of the most serious trade disputes in the modern history of the two countries. As two of the world’s closest trading partners, Canada and the United States have long benefited from free trade agreements such as NAFTA and its successor, the United States–Mexico–Canada Agreement (USMCA). However, the return of Donald Trump to the U.S. presidency in January 2025 set the stage for a dramatic shift in American trade policy. President Trump campaigned on a strong protectionist platform, promising to revive American manufacturing and reduce dependence on foreign imports. On February 1, 2025, he signed executive orders imposing sweeping tariffs: 25% on most Canadian imports and 10% on Canadian oil, gas, and potash. He justified these measures on the grounds of national security and unfair trade practices, invoking sections 232 and 301 of U.S. trade law. The tariffs officially took effect on March 4, 2025. Canada responded immediately by imposing 25% tariffs on approximately CA$30 billion worth of U.S. products, targeting politically sensitive sectors such as steel, aluminum, household appliances, and certain agricultural goods. Both governments adopted an increasingly confrontational tone, with President Trump threatening even higher tariffs if Canada did not agree to new trade terms. In the following months, the U.S. introduced increasingly stringent measures. Tariffs on steel rose to 50%, and auto parts not fully produced in North America faced 25% duties. Canada expanded its retaliation, increasing tariffs on additional U.S. goods and filing challenges at the World Trade Organization. By mid-spring, the trade dispute had disrupted key industries, particularly in the automotive, steel, aluminum, and forestry sectors. On May 28, 2025, a U.S. trade court ruled that some of the new tariffs exceeded the president’s authority under emergency powers. However, tariffs imposed under national security (Section 232) and unfair trade (Section 301) provisions were deemed fair, and were therefore upheld. That left most of the measures in place. The tariff war caused immediate economic disruption. The automotive industry, deeply integrated across the United States–Canada border, reported billions of dollars in losses. Stellantis, a major automaker, alone projected a US$1.7 billion hit in 2025 as shipments fell by about 25%. United States tariffs on Canadian lumber were increased to an effective rate of around 35%, pushing up housing and construction costs in the United States. Canadian aluminum producers began diverting exports to Europe and other markets to reduce reliance on the U.S. For consumers, prices of imported goods rose on both sides of the border. Small and medium-sized businesses reported difficulties claiming USMCA exemptions, meaning that they were paying full tariffs even on qualifying goods. The Canadian public reacted strongly to what many people perceived as United States economic bullying. Consumer boycotts of American goods and travel to the United States gained widespread support. Politicians from across the spectrum called for Canada to diversify trade relationships, deepen ties with Europe and Asia, and reduce its economic dependence on the United States. Through mid-2025, trade talks between the two countries remained deadlocked. Trump set an August 1, 2025 deadline for a new bilateral trade deal, threatening to impose 35% tariffs on Canadian imports if no agreement was reached. At the same time, he floated the idea of a universal “world tariff” of 15–20% on imports from all countries, which could further harm Canadian exporters. Canadian officials, led by Prime Minister Mark Carney, describe the current talks as being in an “intense phase,” but they acknowledge that a comprehensive deal before the deadline is unlikely. Canada has continued to prepare new retaliatory measures and pursued formal disputes through the World Trade Organization. The 2025 Canada–U.S. tariff war has underscored the fragility of even the closest trade relationships when political priorities shift. While the two countries remain bound by the USMCA, the conflict highlights the limits of trade agreements in constraining unilateral tariff actions. As of late July 2025, the outcome of the negotiations—and the future of North American trade integration—remains uncertain, with significant economic and political consequences looming for both nations. Let us hope for the best, and good luck to Canada in making the best possible deal for its people!