Canada Prepares Countermeasures as Trade Dispute with US Escalates

Canada's Prime Minister Mark Carney has room to maneuver in the escalating trade dispute with the US, which is the world's largest economy. According to a recent analysis, Canada sells about 70% of its goods to the US, making it the top customer for 26 US states and in the top three for 45 of the 50 American states.

Carney has planned Canadian retaliatory duties as 'dollar-for-dollar' countermeasures focused on steel, dairy, appliances, agricultural equipment, electronics, pulp and paper. However, the list is still being finalized.

Ottawa's Finance Department announced that additional measures to protect workers and businesses would be announced on Tuesday.

Critical energy supplies are also a key leverage point for Canada, as it provides the vast majority of US natural gas and electricity imports, and about 60% of crude oil imports. Ontario Premier Doug Ford has even floated a 25% surcharge in 2025 on all electricity exports to the US.

A decision by most provinces to ban US alcohol from liquor store shelves last year dealt a devastating blow to that industry in the US, resulting in a $357m loss in export value. The boycott remains in place in 11 of the 13 Canadian provinces and territories.