US-Canada Trade War: Impact on Both Sides of the Border
The United States and Canada have not yet reached a solution to their trade dispute, which has lasted over a year and a half. Tensions began to rise immediately after Donald Trump returned to the White House, launching a broad series of tariffs on imports from around the world. Canada was among the first countries targeted by these measures and responded immediately by introducing reciprocal tariffs on American goods. Currently, Washington has imposed tariffs on key sectors of the Canadian economy, including steel, aluminum, lumber, and automobiles. Last week, the US administration added an additional 50% tariff on approximately 28 billion Canadian dollars worth of Canadian goods—equivalent to about 20 billion US dollars or 15 billion pounds sterling—intensifying pressure on exporters.
On its part, Ottawa responded with its own retaliatory measures, applying dollar-for-dollar tariffs on American goods, a strategy described as both balanced and targeted toward vulnerable sectors. These Canadian tariffs apply to a wide range of products, from steel and furniture to cosmetics and toilet paper, with a total value of about 28 billion Canadian dollars, in effect since September 8. According to data from Statistics Canada, some US states are more exposed than others to these measures. Ohio, considered a swing state in elections, will be the most affected, with approximately 3.2 billion Canadian dollars in its exports—equivalent to 12% of the total—subject to Canadian tariffs. Among the targeted products are steel and washing machines, two categories that have a significant impact on local industries. Illinois and Pennsylvania follow on the list, experiencing significant but less intense effects than Ohio.
On its part, Ottawa responded
In Canada, the effects of the US tariffs are not evenly distributed. Provinces with a strong industrial base, particularly in the automotive and metallurgical sectors, have borne the brunt. Ontario, being the most populous province and having significant production of vehicles and parts, has been hit hardest. Multiple production and assembly units in the automotive sector have announced reduced activity and layoffs, leading to the loss of tens of thousands of jobs since early 2025. In Quebec, metal production—including steel, copper, and aluminum—fell by 36% between February 2025 and the same month in 2026, and employment in this sector decreased by 3.6%, according to a report published in July. The Royal Bank of Canada analyzed the impact and concluded that Ontario and Quebec are the most affected by US tariffs, while Newfoundland and Labrador, New Brunswick, Alberta, Saskatchewan, and Prince Edward Island experienced less pronounced effects.
However, the additional measures introduced by the United States on August 22, which apply to approximately 20 billion US dollars worth of Canadian goods, could shift the dynamics. Although all provinces will be affected to some degree, British Columbia, Quebec, and Ontario will bear the heaviest burden. These tariffs target products that do not fully comply with the USMCA trade agreement, especially in sensitive sectors such as steel and automobiles. While the American economy is much larger and more diversified, and the effects of Canadian tariffs are more diffuse, some states are more vulnerable due to their specialization in targeted goods. Thus, alongside Ohio, Illinois, and Pennsylvania, other states may also face difficulties, particularly in areas where manufacturing plays a major role.
Without a clear prospect of resolution in the near future, the trade dispute continues to affect economies, jobs, and supply chains on both sides of the border. Although neither side appears willing to fully concede, economic pressure may ultimately force a return to the negotiating table. Until then, the effects will be felt in Ontario factories, Prairie farms, Ohio stores, and Pennsylvania homes, where consumers and workers already sense the weight of trade tensions. This situation underscores how interdependent the two economies are and how quickly a protectionist policy can disrupt the balance of a decades-long partnership.