Canada has announced retaliatory tariffs of up to 50% on a variety of United States (US) goods after trade talks between the two countries failed to reach an agreement.
The tariffs involve US products worth nearly C$28 billion (US$20 billion), including steel, furniture, fresh tuna and cotton T-shirts.
The measure is scheduled to take effect on September 8.
Canada Responds to Trump's Tariffs
Canadian Finance Minister François-Philippe Champagne said the US tariffs are affecting Canadian workers and businesses.
Therefore, the retaliation is described as a proportionate and strategic measure.
The Canadian government is also providing an additional C$7.5 billion to assist affected businesses and workers, including efforts to reduce the risk of job losses.
Supply Chains Will Be Stressed
The US and Canada have very close trading relationships with supply chains spanning both countries.
The new tariffs have the potential to increase trade and operating costs for companies.
The additional costs could eventually be passed on to consumers through higher prices for goods and services.
Businesses also face the risk of supply chain disruptions if the tariff war drags on.
Trump Threatens Higher Tariffs
US President Donald Trump has continued to ratchet up pressure on Canada.
Trump has threatened to raise tariffs on Canadian cars to 50% from January 1.
Canadian Prime Minister Mark Carney has warned that higher tariffs could hurt key Canadian industries, including the automotive, steel and aluminum sectors.
Negotiations Still Have a Chance to Resume
Tensions between the two countries have been rising after trade talks stalled.
However, some officials from both sides have begun to adopt a more diplomatic tone, suggesting there is still room for talks to resume.
For now, the US-Canada tariff war has the potential to add to global trade uncertainty, especially if both countries continue to raise tariffs and retaliate.
