U.S.-Canada Tariffs: What Economic Developers Need to Know

The latest

The U.S.-Canada trade relationship has taken another turn in recent weeks, with new U.S. tariffs on certain Canadian goods now in effect and Canada preparing new counter-tariffs on U.S. products.

The latest developments follow months of trade tensions and negotiations between the United States and Canada over tariffs and other trade issues. The two countries continued discussions through July and August in an effort to reach an agreement, but the talks ultimately broke down.

On July 20, President Trump signed three proclamations imposing additional 50% tariffs under Section 338 of the Tariff Act of 1930 on specified Canadian products.The tariffs cover products in categories including alcoholic beverages, dairy and motor vehicles, as well as other goods ranging from wine and hockey sticks to cement. The White House said the tariffs were intended to address what the administration considers discriminatory treatment of U.S. commerce by Canada.

The tariffs were initially scheduled to take effect August 19. On August 18, the White House delayed implementation by three days, setting the effective date for August 22. The tariffs are now in effect.

Canada has announced that it will respond with new counter-tariffs. On August 27, the Canadian government confirmed that it will match the new U.S. tariffs dollar-for-dollar and rate-for-rate, imposing additional tariffs on approximately $27.6 billion in U.S. imports beginning September 8. Canada also announced that it has suspended trade negotiations with the United States, saying recent U.S. proposals were not in Canada's best interest.

The developments are significant for economic developers because of the highly integrated nature of U.S. and Canadian economies and supply chains. Changes in tariffs can affect manufacturers, exporters, and businesses that rely on cross-border suppliers, components, and customers.

What are the current tariff actions?

U.S. actions

Section 338 tariffs: The United States is imposing an additional 50% tariff on specified Canadian products. The affected products include alcoholic beverages, dairy products, and motor vehicles, as well as other products identified in the administration's tariff schedules.
Effective date: The new Section 338 tariffs took effect August 22, 2026.
USMCA treatment: The new Section 338 tariffs apply to covered goods regardless of whether the goods qualify for preferential treatment under USMCA.
Exclusions: The Section 338 tariffs do not apply to energy, potash, products already subject to Section 232 tariffs, and certain other products, including specified fish and critical minerals.
Separate Section 232 tariffs: Other U.S. tariffs remain in effect under Section 232, including the 50% tariffs on steel and aluminum and other sector-specific tariffs. These are separate from the new Section 338 tariffs.

Canada’s actions

Effective September 8: Canada will impose new counter-tariffs on approximately $27.6 billion of U.S. imports.
Rates: The new tariffs will be 15%, 25%, or 50%, with the rate for an individual product matching the applicable U.S. tariff.
Affected sectors: The new measures focus on products in sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics.
Existing measures: Canada's existing counter-tariffs, including those affecting U.S. automobiles, will remain in place.
Business support: Canada also announced a new $7.5 billion package of measures to support workers and businesses affected by U.S. tariffs, including additional funding through Canada's regional development agencies and new liquidity support through the Business Development Bank of Canada.

What happens next?

The most immediate date to watch is September 8, when Canada's counter-tariffs on U.S. goods are scheduled to take effect.

Canada also announced on August 27 that it has suspended trade negotiations with the United States but leaves open the possibility of resuming them if the U.S. provides further acceptable clarifications. However, at this time, neither country has announced a date for negotiations to resume.

Meanwhile, the USMCA joint review began July 1, 2026. The review is a separate process from the current tariff actions.

What IEDC members can do:

We will continue to keep you updated as we learn more. In the meantime, we encourage all members to:

Stay Informed: Monitor official communications from the U.S. and Canadian governments, as well as responses from other international government authorities, to stay updated on policy changes and potential retaliatory measures.
Assess Local Impact: Identify industries within your service area that rely on imports or exports. Evaluate potential implications to businesses and supply chains in your region.
Engage with Affected Businesses: Communicate with local businesses to understand their concerns and provide guidance on mitigating the impact of the tariffs.
Explore Alternative Supply Chains: Assist businesses in identifying alternative suppliers or new customers to reduce their reliance on imports or exports subject to tariffs.
Advocate for Support: Work with local and state officials to develop support mechanisms for businesses adversely affected by the tariffs, such as financial assistance or tax relief.
Keep IEDC informed on what you are hearing and any specific impacts experienced by your communities or regions.

Resources

For members seeking additional information, IEDC recommends monitoring the official U.S. and Canadian government sources below:

IEDC will continue to provide updates and resources as the situation evolves. In the meantime, please do not hesitate to reach out to us with any questions or concerns.