Imagine – what is the last country in the world that you think the U.S. would be in an insult-hurling, deepening trade war that seems to get uglier every day? I think most of us would not choose our North American neighbor, Canada. Having been part of the former British Empire, Canadians and Americans share a similar culture and history. Both countries have fought and died side-by-side in wars against aggressors. Canadians send the U.S. entertainers such as Neil Young, Shania Twain, Leonard Cohen, Ryan Gosling, and Keanu Reeves. We send Canada Major League Baseball, the NBA, and TV shows such as the Simpsons, Friends, and The Office. There has not been a nation that has been so close the U.S. diplomatically and culturally. However, by reading the daily news, one would not guess that this is true.
In February of last year, President Trump imposed 25 percent tariffs on goods imported from Canada, even though most goods are supposedly protected from tariffs under the U.S.-Mexico-Canada-Agreement (USMCA). Canada retaliated by imposing 25 percent tariffs on U.S. metal imports, and then on automobiles. This significantly decreased the purchase by Canadians of U.S. automobiles. In response, in April 2025, incensed at Canada’s retaliatory tariffs, Trump imposed a 25 percent tariff on Canadian automotive products.
As required by the USMCA treaty, a sixth-year review was mandated for July 1, 2026. The U.S. had been negotiating with Canada pertaining to parts of this agreement, but trade talks fell apart on August 21. The Trump Administration then stated that it had “no choice” but to impose a 50 percent tariff on US$20 billion of Canadian imports, including aluminum, steel, lumber, and automotive components, starting August 25. Trump also vowed to impose a 50 percent tariff on Canadian automobile imports on January 1. In announcing the new tariffs, Trump posted, "Canada has been ripping off the United States of America for years. They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US.” He also claimed that Canada had been unfair to U.S. dairy producers.
In response, Canada announced that it would pursue a dollar-for-dollar tariff strategy of US$20 billion on more than 600 U.S. imported goods, including appliances, cheese, milk, cream, toilet paper, tissue, and wood pulp used to make these last two products. These tariffs will come into effect on September 8. Canada also announced a US$5.42 billion financial aid package for Canadian businesses that are affected by the trade war. Accompanying Canada’s new tariffs was an announcement by Canadian Minister of Industry Melanie Joly that “We’re also targeting products that will target states in the U.S. We’re being wise and strategic to put political pressure." Canada is particularly targeting U.S. swing states such as Pennsylvania and Ohio.
What is really going on here? Canada is our second-largest trading partner with U.S.-Canada bilateral trade of more than US$872 billion in 2025. The U.S. GDP was US$30 trillion in 2025, while Canada’s GDP was US$2.32 trillion. The U.S. exported US$336 billion in goods to Canada in 2025, down about 3.8 percent, most of which can be attributed to the tariff war. It is very hard to make a case that a country with a GDP of less than 10 percent that of the U.S. can be ripping us off. The U.S. is currently exporting almost US$30 billion of products to Canada per month.
Canada does indeed impose some tariffs on U.S. dairy imports. However, to say that Canada is shutting out U.S. dairy products from its market is very untrue. Canada did not change the average tariffs on U.S. dairy imports from Trump’s first term in office through the Biden Administration. When the trade war started, dairy products did come under fire. However, the USDA recently reported that Canadian imports of U.S. dairy products have increased by 80 percent since 2020. Furthermore, it was reported that the U.S. sells double the number of dairy products to Canada than Canada sells to the U.S. This clearly indicates that exports to Canada are not the real reason for the trade war.
Trump seems genuinely agitated and surprised that Canada fights back when he picks a fight with them. Of course, Canada will retaliate and this seems to trigger Trump to escalate the trade war. Canadians are tired of being bullied and belittled by Trump, and the majority of Canadians do not want Canadian Prime Minister Mark Carney to back down.
Americans are weary of tariffs and their effect on inflation. American businesses are weary of the instability that tariffs today, no tariffs tomorrow, and tariffs again the next day are having on their business planning and supply chains. For Canadians, the weariness doesn’t seem to have to do so much with tariffs, but rather with the disrespect and bullying that the U.S. has shown this long-standing ally and neighbor since Trump returned to office last year. Canadians have been willing to stop buying U.S.-made products even when no tariff exists. There are currently boycotts in several Canadian provinces preventing the stocking of U.S. liquor. Canadian tourism is steeply down in popular tourist spots such as Miami and Las Vegas.
While the U.S. economy is much larger than Canada’s and is poised to withstand a continuing trade war better than Canada, Canadians have an advantage over the U.S. in this spat – resolve. They are voluntarily choosing not to spend their money on U.S. products and entertainment, tariffs or no tariffs. They are encouraging Carney to forge stronger trade relationships with other countries and become less dependent on the U.S. in the future. In this sense Canada can claim victory with the pride of having stood up to the U.S. Needless to say, Canada will probably be revered by other nations who have seen the U.S. impose tariffs on their imports for its actions in a war it didn’t start. Meanwhile, the U.S. will have to figure a way to end this latest war, since Canada, like Iran, apparently is not backing down.
Jerry Pacheco is the president of the Border Industrial Association.
Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.