In brief
The trade dispute between the United States and Canada has deepened since President Trump’s return, with the US slashing steel, aluminium, lumber and automotive parts and Canada matching with sector‑specific counter‑tariffs. Ontario, the country’s manufacturing hub, has suffered the worst, losing tens of thousands of jobs and seeing automotive plants slash output. While US states like Ohio feel the pressure of Canadian tariffs on steel and consumer goods, Canada’s exports are shifting toward Europe and other markets, meanwhile a tightening of tariffs has nudged the effective rate on Canadian goods from 2.9% to 5.7%. Economists warn that further US tariffs could wipe out up to 90,000 Canadian jobs and raise consumer prices in both countries.
The US and Canada remain far from a resolution on their trade dispute. The wide‑ranging tariffs launched by President Donald Trump over 18 months ago still loom large.
Canada, one of the first nations targeted, has launched reciprocal counter‑tariffs. These “dollar‑for‑dollar” measures hit 12% of US steel exports, add wipes to lumber, and a fresh 50% levy on $20bn of Canadian goods entered on 22 August. The US now imposes a range of tariffs from steel to kitchen appliances on Canadian exports worth C$28bn.
Ontario bears the brunt: the province has lost tens of thousands of manufacturing jobs since early 2025. Auto parts and assembly plants reported layoffs and production cuts as steel and auto tariffs “tightened” the supply chain.
Metal exports from Quebec dropped 36% between February 2025 and 2026, and employment fell 3.6% in that sector. While the broader Canadian economy has rebounded – with 3.3% GDP growth in Q2 2026 – the provinces hardest hit remain wary.
US swing states feel Toronto’s heat: Ohio will be hardest hit, with 12% of its exports now tariff‑ready, followed by Illinois and Pennsylvania. Boasting the like‑thick turnover on steel, Ohio’s industries see the tariffs as a direct threat; in Illinois, farm and construction equipment brands face new duties.
Effective US tariff rates on Canada have jumped from 2.9% to 5.7% in June, eclipsing Mexico’s 2.7% and approaching the UK’s 6.2%. China still faces the highest US tariffs at an average of 20.5%.
Amid rising tariff costs, Canada’s trade structure is shifting. The US purchases more than 70% of Canadian exports, but businesses are moving toward Europe and Southeast Asia. Canadian CEO Matthew Sgaramella notes that attendees at Paris trunk shows report interest from European buyers who favor Canadian goods in light of the trade war.
Employability suffers too. Bank of Canada data show 55,000 Canadian manufacturing jobs lost from Jan 2025 to Jan 2026, while the Center for American Progress estimates that Trump’s tariffs cost US manufacturing and warehousing thousands of jobs. The Tax Foundation calculates that a typical American household will pay an extra $840 this year because of tariffs.
With Canada’s counter‑tariffs designed to limit consumer price increases, business costs have risen. The Canadian Chamber of Commerce reports that key Ontario regions such as Oshawa, London and Kitchener‑Cambridge‑Waterloo remain heavily tied to the US and struggle to diversify.
The Canadian government’s recent $96.8 billion of foreign direct investment and the promise of a Canada Investment Summit signal a push for broader economic resilience, yet the trade war continues to keep businesses and jobs in limbo.
