Canada has announced it will impose retaliatory tariffs on American goods, matching United States duties dollar for dollar. The decision follows the collapse of trade negotiations between the two nations and responds to 50% levies imposed by President Donald Trump.

Canadian Trade Minister Dominic LeBlanc confirmed the announcement to CNBC, stating that Ottawa would unveil the specific response at a press conference at 11 a.m. ET on Tuesday. Speaking to CNBC, LeBlanc noted that the measures were not Canada's preferred option.

Our preference was to find a deal that benefits both countries. We still believe that's possible. But in the meantime, we're not waiting by the phone.

Finance Minister François-Philippe Champagne outlined the counter-tariff plan during a virtual meeting with provincial and territorial finance ministers on Monday. The dollar-for-dollar duties are scheduled to take effect on September 8. According to the Department of Finance, the government also plans to announce a support package intended to help businesses maintain liquidity, support workers, and strengthen Canada's economic competitiveness.

Background of the trade dispute

The counter-tariffs arrive after approximately 18 months of trade negotiations broke down. Minister LeBlanc told provincial and territorial ministers that Canada had approached the discussions pragmatically and in good faith.

The dispute began in mid-July when President Trump signed three proclamations imposing 50% tariffs on certain Canadian imports, covering approximately $20 billion in goods. The US cited Canada's treatment of dairy products, alcoholic beverages, and American motor vehicles as the reason for the duties. These tariffs were implemented under Section 338 of the Tariff Act of 1930, a provision that has not been used since 1949.

On August 19, Trump briefly paused the tariffs for three days, citing progress towards a bilateral agreement. However, negotiations unravelled the following Friday night. Canadian Prime Minister Mark Carney suspended the talks and stated that Canada would match the US tariffs dollar for dollar, describing last-minute changes to proposed American terms as unfair and uneconomic.

U.S. Trade Representative Jamieson Greer disputed the Canadian Prime Minister's account, stating that Canada had pushed for additional concessions after the two sides had reached the outline of a deal.

Future tariff threats and election outlook

On Monday, Trump threatened to increase tariffs on Canadian auto parts, trucks, and cars to 50% on 1 January 2027, an increase from the current 25% rate applied to non-U.S. content. According to Bloomberg, Canadian officials see little possibility of trade talks resuming before the U.S. midterm elections.