Canada Hits Back with $20 Billion Tariffs in Escalating US Trade War

Canada has implemented retaliatory tariffs on US goods worth $20 billion, effective from Tuesday morning. The tariffs, ranging from 15% to 50%, target products such as steel, furniture, clothing, and electronics.

The move is in response to the US's imposition of tariffs on Canadian wine, furniture, dairy products, cement, clothing, fishing rods, and hockey equipment last month. According to government data, Canada has shipped almost 68% of its total exports to the US this year, with about 80% moving duty-free due to exemptions under the USMCA pact.

Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance, expressed concerns that the escalating trade war could lead to an 'escalatory spiral'. He also acknowledged the need for the Canadian government to find areas of leverage in negotiations with the US. However, Harvey cautioned against overreacting to US rhetoric.

The new tariffs do not allow Ottawa to exercise USMCA exemptions, which have provided the domestic economy with some resilience. The trade war has raised concerns about investment and growth, particularly given Canada's smaller economy compared to the US, which is 13 times larger.