A New Front Opens in the Trade War
The trade dispute between Canada and the United States has entered a fresh and dangerous phase after President Donald Trump signed executive orders banning imports of several Canadian products, including alcoholic beverages, motorcycles and certain dairy goods. The measures, set to take effect on September 29, represent Washington’s most pointed retaliation yet since Ottawa imposed its own countertariffs on nearly $28 billion worth of American products earlier this week.
The sweeping bans arrive alongside adjustments to existing levies, with some products receiving reprieves while others face fresh pressure. Toilet paper, road salt and cement have been exempted from tariffs, while cheese products, motorboats and paper face steeper duties. The mixed messaging has left businesses on both sides of the border scrambling to assess what comes next.
“It May Be Months” Before Talks Resume
Canada’s former ambassador to the United States has offered a sobering assessment of the diplomatic outlook, suggesting that formal negotiations may not resume for some considerable time. Kirsten Hillman, who served as ambassador and acting ambassador to Washington for more than six years before stepping down in February, said in a recent interview that the current impasse reflects a fundamental shift in how both nations are approaching the dispute.
“In any trade negotiation, there comes a point when countries articulate their red lines and hold firm to them. Canada has reached that point in these discussions,” Hillman said. She stressed that the United States must demonstrate a “full understanding, appreciation and respect” for Canada’s positions before productive dialogue can restart.
Her message was blunt: “Canada will not accept a deal that tanks our steel industry, or tanks our auto sector, and nor should we.”
Ottawa’s Response: Patience Over Escalation
Finance Minister François-Philippe Champagne has signalled that Canada is in no rush to retaliate further, urging caution as officials analyse the full impact of Washington’s latest moves. Speaking in Edmonton this week, Champagne confirmed that Canadian and American officials remain in contact, but said any additional engagement would happen “at the right time.”
“We don’t want to escalate, but we, at the same time, want to make sure we have a level playing field,” he said. The federal government has already announced billions of dollars in support programmes for affected businesses and workers, and Champagne indicated more could follow depending on how the situation develops.
Dominic LeBlanc, the minister responsible for Canada-U.S. trade, confirmed on Tuesday that he had been in communication with U.S. Trade Representative Jamieson Greer, though no breakthrough was announced.
The Provincial Picture: Uneven Burden Across the Country
The economic pain from the escalating trade measures is far from evenly distributed. Analysis suggests that Ontario will bear the heaviest burden, with an estimated $2.4 billion in exports facing new tariffs or outright bans — roughly 1.24 per cent of the province’s total shipments to the United States. Quebec follows with approximately $1 billion in affected exports, driven largely by steel, alcohol and the motorcycle sector.
By contrast, the prairie provinces appear relatively insulated. Saskatchewan Premier Scott Moe noted that around 94 per cent of his province’s exports remain tariff-free, even as U.S. orders target specific goods such as honey and wooden furniture while dropping duties on items like road salt and electrical panels. Alberta and New Brunswick similarly escape the worst of the measures.
Industries Under the Spotlight
Among the businesses preparing for the new restrictions is Moosehead Breweries, the New Brunswick brewery that has sold its products across the United States for nearly half a century. Chief executive Andrew Oland said the prospect of losing access to a market that accounts for 15 per cent of the company’s volume is “material,” though he expressed confidence in the brewery’s resilience. Founded in the year of Confederation, Moosehead has weathered catastrophes before — including the Halifax Explosion of 1917 — and Oland said the company would not move production south of the border in response to the ban.
In Quebec, Bombardier Recreational Products has confirmed that its Can-Am Spyder and Canyon three-wheeled vehicles, manufactured in Valcourt, will be excluded from the U.S. market starting September 29. The company, spun off from Bombardier in 2003, said the impact on its fiscal 2027 results is expected to be limited, as most current-season production has already been shipped.
Political Fallout and the American Midterms
The trade dispute is increasingly shaping political dynamics south of the border. At the Republican National Convention in Dallas, billed as “Trump-a-Palooza,” the escalating trade war barely registered among the party faithful gathered for what is simultaneously a fundraiser and a momentum-building exercise ahead of November’s midterm elections. Attendees appeared more focused on domestic issues than on cross-border commerce.
However, cracks are showing among Republican lawmakers. Wisconsin Governor Tony Evers, a Democrat, issued an open letter to his state’s Republican members of Congress, warning that Wisconsin businesses have paid an estimated $5.4 billion in tariffs while households face an average additional cost of $2,035. Canada remains Wisconsin’s closest trading partner, importing $7.5 billion in goods last year.
Maine Senator Susan Collins, one of the few remaining moderate Republicans in the Senate, called on the administration to de-escalate, noting that significant tariffs on forest products remain in place and will drive up costs for her state’s families and businesses. She was among four GOP senators who voted last year to end some of Trump’s tariffs on Canada, though the measure was largely symbolic.
On the Democratic side, five U.S. senators — Jeanne Shaheen, Chris Coons, Patty Murray, Amy Klobuchar and Elissa Slotkin — issued a joint statement condemning what they described as a “pointless” trade war, warning that tariffs have already cost American families up to $5,000 in some states.
Conservative Leader Makes His Pitch
Conservative Leader Pierre Poilievre has announced plans to travel to New York City this week to argue directly for tariff-free trade between the two nations. Speaking from his office, Poilievre framed Canada’s greatest asset in the dispute as the goodwill of the American people, saying both countries would be “safer, richer and more affordable if we trade freely.” He also said he would honour victims of the September 11 attacks and highlight the contributions made by Canadians and Americans in the aftermath.
“America’s real rivals and risks are overseas. Working with Canada to confront them is one of the best ways to protect the American people and their livelihoods,” Poilievre said.
Markets Wobble as Uncertainty Grows
Financial markets reflected the unease, with Canada’s main stock index falling to an eight-day low. The S&P/TSX Composite Index closed down 216.49 points, or 0.6 per cent, at 35,906.56, marking its third consecutive session of declines. Oil prices climbed above $100 a barrel after attacks on shipping in the Middle East, while bond yields reached their highest levels since 2023, creating a difficult combination for equities.
The Canadian dollar weakened to $1.3805 against its U.S. counterpart, giving back much of the previous day’s gains.
Despite the turbulence, chief executives of Canada’s largest banks struck a cautiously optimistic tone, telling a conference that consumers and businesses have shown resilience and that loan defaults remain manageable. Royal Bank of Canada chief executive Dave McKay said credit risk has improved as clients adjust to the uncertain environment, though he acknowledged that companies are making more conservative investment decisions.
A More Muted Impact Than Headlines Suggest
Beneath the dramatic headlines, some analysts argue the economic damage may be more contained than initially feared. Trade law professor Wolfgang Alschner of the University of Ottawa noted that many of the newly banned products were already subject to 50 per cent tariffs under Section 338 of the U.S. Tariff Act of 1930, meaning the incremental impact is smaller than it appears. The total value of goods facing Section 338 tariffs rose only marginally, from $20.15 billion to $20.26 billion, after Washington added $1.85 billion in new products while removing $1.74 billion from the original list.
The Canadian Chamber of Commerce has urged Ottawa against further retaliation, saying the American response, while unwelcome, could have been far worse. Executive vice-president Matthew Holmes said the government should remain vigilant but avoid being drawn into “an emotional response because of social media or kind of tough guy tactics.”
Why It Matters
The widening trade conflict between Canada and the United States represents far more than a dispute over tariffs — it is a fundamental test of one of the world’s most important bilateral relationships, one built over decades of shared commerce, security and cultural ties. With formal negotiations stalled, industries on both sides of the border facing genuine uncertainty, and the dispute increasingly shaping political campaigns ahead of America’s midterm elections, the stakes could hardly be higher. The decisions made in the coming weeks will determine whether this chapter ends with a negotiated settlement that preserves the economic partnership both nations depend on, or whether the rift deepens into something far more difficult to repair.
