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Since President Trump took office in January 2025, the US has imposed sweeping tariffs on Canadian imports, prompting Canada to retaliate with its own measures. As of October 2025, Canadian goods face up to 35% tariffs, while Canada has matched many of these with its own levies.
Here is a chronological timeline of key tariff actions between the U.S. and Canada since Trump’s inauguration:
U.S. Tariffs on Canada
- February 1, 2025: Executive order signed imposing tariffs to take effect March 4.
- 25% tariffs on most Canadian goods
- 10% tariffs on energy, critical minerals, and potash
- March 6, 2025: Exemptions granted for goods compliant with the USMCA (Canada-U.S.-Mexico Agreement), covering 90% of Canadian exports
- March 12, 2025: 25% Steel and 10% aluminum tariffs imposed globally, including Canada:
- April 3, 2025: Auto tariffs begin on non-USMCA-compliant vehicles.
- August 1, 2025: Tariffs raised to 35% on non-USMCA Canadian imports after trade talks stall
- October 25, 2025: Trump announces an additional 10% tariff hike on Canadian goods in response to an Ontario ad featuring Ronald Reagan criticizing tariffs
Canada’s Retaliatory Tariffs against the U.S.
- February 1, 2025: Canada announces matching 25% tariffs on up to $155 billion in U.S. imports
- March 13, 2025: Canada imposes $29.8 billion CAD ($20.7 billion USD) in retaliatory tariffs, targeting U.S. steel, aluminum, and consumer goods
- April 9, 2025: Canada matches U.S. auto tariffs with 25% levies on non-USMCA-compliant vehicles
- June 2025: Canada briefly suspends plans for a Digital Services Tax (3% on U.S. tech firms) after U.S. objections
Current Status (as of October 2025)
- US tariffs: Up to 45% total on some Canadian goods (35% base + 10% recent hike), excluding USMCA-compliant products.
- Canada’s response: Matching tariffs on US goods, especially steel, aluminum, autos, and consumer products.
- Trade talks: Suspended following the Ontario ad controversy; Canada remains open to resuming negotiations
Who is benefiting more?
As of October 2025, the United States is collecting significantly more tariff revenue from Canadian imports than Canada is collecting from U.S. imports, making the U.S. the net tariff beneficiary in this bilateral trade relationship.
Here’s a breakdown of the current net tariff dynamics:
U.S. Tariff Revenue from Canadian Imports
- Total customs revenue (Jan–Jul 2025): $80.3 billion from all trading partners
- Estimated share from Canada: Roughly $12–15 billion, based on Canada’s 18% share of U.S. imports and elevated tariff rates
- Effective tariff rate on Canadian goods: Up to 35%, excluding USMCA-compliant products
- Key revenue drivers are steel and aluminum with a 41.2% effective rate, automotive at a 22.3% rate, and consumer goods at 9–12%.
Estimated retaliatory tariffs from Canada:
- $29.8 billion CAD (~$20.7 billion USD) imposed on US goods
- Effective tariff rate: Lower than U.S. rates, averaging 10–15% on targeted sectors
- Key targets:
- US steel and aluminum
- Autos not compliant with USMCA
- Consumer goods and agricultural products
What is the new tariff result?
The US collects more in tariffs than Canada does due to its broader tariff coverage, higher rates, and larger import volumes from Canada. Canada's tariffs are narrower, focused on retaliation and sector-specific levies. Similarly, the net fiscal advantage is to the US, as the US Treasury collects more customs revenue from Canada than Canada collects from the US.
Are Canadians traveling less to the U.S., and what is the impact
Canadian travel to the US has dropped sharply in 2025, primarily to Florida, resulting in billions in lost tourism revenue and a projected winter shortfall for the hospitality business. Canadian tourism to the US is down 33% year-over-year as of June 2025, marking six consecutive months of steep declines. Air travel: Dropped 22% in June; border crossings by car fell 38% in May and 33% in June.
Airline bookings from Canada to US destinations are down considerably for the coming winter, with Florida hit hardest.
The impact on the US economy is significant, with Canadian tourists spending $20.5 billion. A 10% drop could threaten up to 140,000 jobs. Canadians cite US tariffs and Trump's "51st state" comments as reasons for boycotting US travel. Additionally, reports of the detainment of Canadian tourists at US borders have fueled fears and reduced travel confidence
Does Canada have alternatives for their exports to the U.S.?
Canada has actively diversified its export markets in 2025, and has successfully redirected approximately 25–30% of its U.S.-bound exports to other global partners, especially in Europe and Asia. Canada now has 15 FTAs covering 51 countries, giving access to 61% of global GDP and 1.5 billion consumers.
The key regions for redirection are Europe, with exports up 22% in 2025 vs. 2024, Africa, with exports up 18%, and Central & South America, with exports up 11%.
While this certainly offsets the economic harm to Canada, they have only covered 25–30% of the lost US export volume through alternative markets.
Canada now has a long-term goal: to reduce dependency on the US by expanding trade with the Indo-Pacific, the EU, and Africa.
Is Trump under any pressure to resolve the situation, or can he wait Canada out?
Trump is facing limited domestic pressure to resolve the U.S.-Canada trade standoff and appears politically positioned to wait Canada out. His administration has prioritized other trade deals and framed Canada as a low-priority partner.
Trump's current stance is dismissive to say the least, having recently said, “Canada could be one where there's just a tariff, not really a negotiation”, signaling little urgency to strike a deal.
Talks were recently halted after an Ontario ad criticized his tariff policy using Ronald Reagan’s words. Trump accused Canada of “fraudulently” influencing U.S. politics and the Supreme Court.
There is little pressure from US businesses. While some US industries (e.g., auto, agriculture, tourism) are affected, there’s no unified business lobby pressuring Trump to resolve the dispute. Additionally, Trump’s base primarily supports his tough-on-trade stance. His “51st state” rhetoric and claims that Canada “cheated” resonate with populist messaging.
Canadian officials also seem in no rush for a deal, saying they won't sign any agreement that isn't in Canada's best interest. Ottawa has downplayed the chances of a deal by Trump's August deadline.
And so the stalemate continues as Trump is politically insulated and focused on other trade wins; he’s unlikely to feel compelled to compromise unless U.S. industries or voters apply sustained pressure. Canada is adapting by redirecting exports and rallying domestic support. Canada is playing a long game, hoping US economic pain will eventually shift Trump's calculus.
However, Canada is already experiencing severe short-term economic pain from US tariffs, including export losses, manufacturing layoffs, and declines in consumer spending. These pressures could constrain its ability to sustain a long-game strategy without more profound relief or breakthroughs in trade.
In short, Canada’s long-game strategy is bold, but it’s walking a tightrope.
David Nevins is publisher of The Fulcrum and co-founder and board chairman of the Bridge Alliance Education Fund.
