Canada's Retaliatory Tariffs Take Effect

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Written by Danny Levin, Deputy Editor for IIR News Intelligence (Sugar Land, Texas)

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Summary

Canada's retaliatory tariffs targeting US$20 billion worth of goods imported from the U.S. are now in effect. This includes a 50% tariff on U.S. steel and aluminum products and derivatives, as well as a range of tariffs on a variety of goods, although energy, electricity and potash fertilizer were spared.

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U.S.-Canada Trade War Escalates

Canada's retaliatory tariffs targeting US$20 billion worth of goods imported from the U.S. took effect on Tuesday, matching U.S. tariffs announced in August dollar-for-dollar. This includes a 50% tariff on U.S. steel and aluminum products, as well as tariffs ranging from 15% to 50% on a variety of goods, although energy, electricity and potash fertilizer were spared.

Canada's 50% tariff on more than 300 steel and aluminum products and derivatives includes flat-rolled steel and aluminum bars, as well as semi-finished steel products such as ingots and billets and a variety of hot-rolled flat steel products. In addition, tariffs now range from 15% to 50% on U.S.-imported items such as dairy, agricultural equipment, pulp and paper, and appliances, among others.

The countermeasures took effect at 12:01 a.m. on September 8, which comes after U.S. President Donald Trump imposed 50% tariffs on the same value (US$20 billion) of Canadian goods beginning August 22. For more information, see August 27, 2026, article -Energy Spared in U.S.-Canadian Trade War.

News reports indicate Canada's retaliatory tariffs match about 6% of what the U.S. sent to Canada last year.

There's evidence the two sides are in communication. A call was scheduled Tuesday 8 between U.S. Trade Representative Jamieson Greer and U.S.-Canada Trade Minister Dominic LeBlanc, although a source familiar with discussions told Radio-Canada that Canadian officials expected the conversation to largely be about the United States' potential response, not specific negotiations. That source also said Canada expects the two sides will discuss "next steps."

"Canada and the United States do not simply trade finished products with one another," Detroit-based Canada and US Business Association (CUSBA) said in a statement in response to the recent tariff hikes. "Our economies are deeply integrated through supply chains in automotive manufacturing, agriculture, energy, construction, metals, technology, and countless other industries. Components and materials frequently cross the border several times before reaching the customer. Each new tariff therefore compounds costs, disrupts production, delays investment, and weakens the competitiveness of U.S. and Canadian businesses."

Steel and Aluminum

For steel, the U.S. relies heavily on Canada. Data from the U.S. Department of Commerce show U.S. imports of Canadian flat steel was 6.7 million metric tons through June, compared to the second-largest supplier, South Korea, which delivered barely half of that.

For aluminum, Industrial Info Resources data show much of the operations in the U.S. are centered in border states Michigan and Ohio. General Motors operates an aluminum foundry in Saginaw, near Michigan's western shore, that can churn out around 59,600 tons per year.

U.S.-Canada tariffs in the steel and aluminum categories most heavily impact cross-border automotive supply chains. "For the auto sector, our view is that the sector is so integrated that the tariffs just don't impact the country you are tariffing but your own country," Atsi Sheth, chief credit officer at Moody's Ratings, said recently.

With its larger steel market, Sheth said, U.S. steel companies are more likely to benefit, although there are no winners in the automotive sector.

Companies are looking to boost production of steel and its derivatives in the U.S. in the face of the 50% tariffs, and construction of one major project could officially begin later this year. Early site preparation for Hyundai Steel Company Limited's $5.8 billion Donaldsonville Steel Mill in Louisiana is underway, and a groundbreaking ceremony was held August 6, although vertical construction cannot begin until the Louisiana Department of Environmental Quality approves the proposed air permit. The facility is designed to use low-carbon technologies to produce 2.8 million tons per year of steel sheet for the South Korean company's automotive assembly lines across the U.S. South. It will be the first U.S. site to produce molten iron and steel plates.

Commercial production is expected to begin in 2029. The Industrial Info Resources Global Market Intelligence (GMI) Metals & Minerals Plant and Project databases offers detailed information on the development in a plant profile and project report.

Under the United States-Mexico-Canada Agreement (USMCA) trade agreement, beginning in July 2027, only vehicles using at least 70% steel products made from North American molten iron will receive tariff-free treatment.

Industrial Info Resources data show there are 278 active capital steel projects totaling $43 billion in the U.S. and Canada. This includes $8.3 billion of projects under construction, $8.7 billion of projects in the engineering stage and $25 billion in projects in the planning stages. The GMI database offers a full list of detailed project reports.

The U.S.-Canada tariff spat could escalate further. Last month, Trump threated to raise U.S. tariffs on all cars, trucks and automotive parts beginning January 1, 2027.

Key Takeaways

• Canada implemented dollar-for-dollar retaliatory tariffs against U.S. imported goods, ranging from 15% to 50%.
• This includes a 50% tariff on more than 300 steel and aluminum products and derivatives.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).