Canada announced a series of targeted tariffs on C$27.6 billion of U.S. imports—the latest barb in a tense trade stand-off between the neighbouring countries.
These measures are designed to match recent U.S. tariffs on Canadian imports—dollar-for-dollar on equivalent products—and are set to take effect Sept. 8.
For Canadian businesses, diversification and expanding trade partnerships are essential in the long run—but in the meantime, uncertainty remains immense on both sides of the border. This is particularly evident in the volatility of talks between the U.S. and Canada so far.
Amid these current circumstances, Canadian businesses and households should expect more economic pain on the horizon. The probability of Canada entering a recession in the next 12 months rose from 25 per cent to 30 per cent—making it imperative for businesses to evaluate all available measures to weather the tariff storm.
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Inflation is also expected to rise given the higher tariff rates and a weaker Canadian dollar. Households will likely see higher prices for consumer products—everything from paper, dairy and seafood products to appliances such as HVAC, refrigerators and dishwashers.
If not mitigated, inflation could remain modestly elevated going forward due to further supply chain disruptions.
The details
Canada’s new tariffs on U.S. imports range from 15 per cent to 25 per cent and 50 per cent on steel, dairy, appliances, agricultural equipment, pulp and paper, electronics and autos and auto parts.
Previous Canadian tariffs on steel and aluminum rose from 25 per cent to 50 per cent to match the new U.S. tariff rates on Canadian steel and aluminum.
The federal government also announced a C$7.5 billion package of measures to support Canadian workers and businesses—including a fund to support tariff-affected businesses—and tariff loans that provide businesses with 36 months of financial liquidity.
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