Trump Hits Canada With Fresh Tariffs, Targets Dairy & Alcohol As Trade War Escalates

United States has widened its trade fight with Canada, announcing fresh restrictions on Canadian goods hours after Ottawa imposed tariffs on $20 billion worth of American imports.

The White House stated that the new US import restrictions will take effect on September 29. They target Canadian alcohol, dairy products, motorcycles and mopeds, while some Canadian goods will also face restrictions in some major long-term US government contracts.

The latest moves follow the collapse of trade talks last month. The dispute now threatens a relationship that has long underpinned close political ties and one of North America’s biggest trading partnerships.

Tariffs And Restrictions

The new US curbs are broad. Washington is targeting most alcoholic beverages from Canada, some dairy products including whey, motorcycles, mopeds and various types of molasses.

Canada’s retaliatory tariffs cover hundreds of US products. The list includes steel, aluminium, cheese, appliances, clothing, cosmetics and farm equipment. Ottawa has set tariff rates of 15%, 25% or 50% on those goods.

The Canadian measures cover about $20 billion in US goods. That is roughly 6 per cent of the $333.6 billion worth of goods the US exported to Canada last year.

Trump has also moved beyond tariffs. He directed the US General Services Administration to declare Canadian products ineligible for large, long-term US government contracts until Canada allows “full and fair reciprocity″ for American products.

The latest escalation builds on an earlier US move. On August 22, Washington imposed 50% tariffs on about 5 per cent of Canadian imports after accusing Canada of unfair treatment of American dairy, alcoholic beverage and auto industries.

Carney's Diversification Push

Carney is framing the dispute as a warning. He said more than 70% of Canada’s exports still go to the US, even as shipments to other countries are rising sharply and are on track to double over the next decade.

“It was easy business, but it meant we relied too much on one economic partner,” he said. “That time is over.”

Carney said the trade measures would cause short-term pain. But he added that they would also push Canada to move faster on investment, infrastructure and trade diversification.

He also argued that Ottawa was acting in defence of its workers, not to intensify the dispute. Carney said Canada’s response became necessary because Canadian companies were facing US tariffs while American goods could still enter Canada tariff-free.

“The most fundamental issue is that the cumulative US demands revealed that they wanted us to become even more reliant on them, not less,” he said. “In too many areas, they wanted dependency, not a true economic partnership.”

Carney said Washington had sought limits on French-language and cultural protections, influence over future trade agreements and terms that would weaken Canada’s auto, steel and forestry sectors.

“It’s about ensuring that no country can hold us hostage. And that we can live how we want to live,” he said.

Europe And Politics

Ottawa is also looking farther afield. Canada is exploring a deeper relationship with the European Union that could stop short of membership.

A Canadian official familiar with the discussions said possible options include expanding existing agreements, negotiating a new treaty or creating other forms of cooperation. Canada is consulting provinces, territories and labour groups on what a deeper EU relationship could look like, but no model has been chosen yet.

Carney is due in Strasbourg, France, next week. He will attend European Commission President Ursula von der Leyen’s State of the European Union address on September 16 and address the European Parliament the following day.

The trade row has political weight at home. The US and Canada have long clashed over Canada’s protected dairy market and subsidies for softwood lumber producers, but the two countries remained close allies for decades.

That has changed under Trump. His repeated remarks about making Canada the 51st US state have sharpened tensions, while Carney came to power last year after a come-from-behind political victory built in part on a promise to stand up to him.

Public reaction in Canada has also hardened. Some provinces have banned the sale of US alcoholic products. Canadians have cut travel to the US and boycotted American goods, moves Carney praised as signs of national resolve.

British Columbia Premier David Eby said the province would install new signs at US border crossings reading, “Welcome to British Columbia, Canada. Strong, proud and will NEVER be the 51st state. Sorry!”

“While our kindness is one of our greatest strengths, you should never, ever mistake that kindness for weakness,” Eby said.

Talks And Outlook

Contacts continue, but neither side appears ready to return quickly to full negotiations. Canada’s Trade Minister Dominic LeBlanc said Ottawa was assessing the latest US measures and remained in contact with US Trade Representative Jamieson Greer.

LeBlanc said Canada was ready to engage when Washington was. A senior Trump administration official told reporters on a White House-arranged conference call late Tuesday that US and Canadian trade representatives had held “constructive conversations” and would speak again in the coming days to see if there was a “path forward”.

Ottawa, however, does not appear ready to alter course. A Canadian official said earlier on Tuesday that the government would not change strategy whether Trump’s response was nothing or a “nuclear response”. The official said Canada would keep focusing on building more at home and diversifying trade abroad.

Former US trade official Wendy Cutler said Carney’s approval rating, now topping 70%, gives him little reason to restart talks soon. “Clearly, at this point each side does not want to look too anxious to reengage in fear of looking weak,” she said.