The Decibel - Canada hits U.S. with retaliatory tariffs

Episode Date: August 26, 2026

The Canada-U.S. trade war is in full effect. On Tuesday, the federal government announced retaliatory tariffs against the United States. U.S. steel, seafood, dishwashers, forks, and all manner of other things are facing tariffs of 15, 25 or even 50 per cent. These new countertariffs take effect in just two weeks, on Sept. 8 – the same day that President Trump’s new round of tariffs against Canadian goods are set to begin. Jason Kirby, from The Globe’s Report on Business, tells us how Canada is striking back in this latest front of the trade war. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The Canada-U.S. trade war is in full effect. On Tuesday, the federal government announced retaliatory tariffs against the United States. U.S. steel, seafood, dishwashers, forks, and all manner of other things, are facing tariffs of 15, 25, or even 50%. These new counter tariffs take effect in just two weeks on September 8th. Jason Kirby from The Globe's Report on Business is here to tell us how. how Canada is striking back in this latest front of the trade war. I'm Mikhail Stein in for Cheryl Sutherland, and this is the decibel from the Globe and Mail.

Hi, Jason. Thanks for joining us again. Thanks for having me on. We should say we're talking just after 2 p.m. on Tuesday. You know, things are changing quickly. But on Tuesday morning, the government announced $27.6 billion worth of retaliatory tariffs. Can you give us just a quick overview of what exactly is going on here? Well, what's going on here is the Canadian response to the latest round of kind of U.S. trade war measures, that being, you know, Trump's 50% tariffs and that he's imposing under this Great Depression era.

The Smoot-Hawley tariffs. The never been used, but he's going to dust it off and apply it to Canada. So this, you know, we've been waiting what is going to be Canada's response ever since, you know, Friday, the trade talks fell apart at the very last minutes. And, you know, at that moment, the government said they were going to come back with some sort of retaliatory measure. Now we actually see what it is. It's kind of a dollar for dollar approach where they're trying to, on the one hand, protect Canadian businesses that are impacted by those tariffs by limiting competition from U.S. companies. but at the same time send a political message in how these tariffs are structured, targeting particular swing states and that. So kind of just get, applying that pressure and just trying to get more voices on Canada's side down in the U.S.

Okay, so we're going to get into all of this. But really quickly, what kinds of things did Canada say they're going to tariff? It runs a really wide range. I mean, you've got things that are directly a response to the U.S. tariffs. Like, you know, Trump hit Canadian honey for some reason. So Canada's hit back on Canadian honey. You've got things like... On American honey.

Sorry, on American honey. You've got clothing. You've got fishing rods, motorcycles. That's a really direct target at Harley Davidson. It's kind of what we did back in 2018 with our retaliatory terrorist, you know, when Trump 1.0 was when we were dealing with that round of trade war. But then you've got a lot of industrial equipment, forklifts, steel products. steel is heavy on here. A lot of products that currently Canada has a 25% tariff on U.S. steel, that's going to 50% on the vast majority of those things. So, you know, it's a real

wide ranging. Some of that consumers will feel, you know, things like golf clubs and fishing rods and all that. The idea is that all of the things they're targeting, you're supposed to be able to, they're supposed to be fairly substitutable that you can find either a Canadian-made alternative or an alternative imported from a country that we don't have a trade war with. Right. And that that's supposed to help keep costs down. But it does. And also the fact is that, you know, tariffs are attacks on consumers.

The importers pay them and those pet costs almost always get handed down eventually to the businesses and consumers, the end users. And, you know, this goes the other way as well. Trump's tariffs are not a tariff that Canada is paying. they're a tariff that American consumers and businesses are paying. So that's what we're doing here. And that does have a big downside, which is, you know, inflation, you know, pushing up prices. So it's always said that when you're in a trade war, you're, you know, you're trying to come up with a way that you can punch, you know, your opponent.

But at the same time, you have to accept that you're punching yourself in the face. Yeah. That's a good way to put it. And it's useful to remember here that when we're talking about Canada putting a tariff on a, American goods, as you say, what this looks like in practice is those goods becoming more expensive to buy in Canada. Yeah, they become more expensive or if it's in the case of 50% tariff, they're not competitive anymore at that level because there's no importer that's going to absorb that kind of

a hit. Right. And so, yeah, what you're doing is you're basically trying to close the market to those goods. Yeah, it becomes not viable anymore. It's no longer viable at that point. Yeah. Was there anything particularly like weird?

that you found in this list of tariffs? Well, I mean, there's always odd things. I was looking through. There's knives and forks and cutlery and spoons. And I was, you know, I was trying to scratch my head, trying to figure out, like, why would, why would that be on there? It's a really small amount. It is a few million dollars. But it turns out that the hardest hit state on that is New York.

There's a big company there that makes knives that boasts made in American knives. It's the biggest, you know, manufacturer of kitchen knives. So, you know, like, oh, that is. who that's targeting. And you see that with a lot of, you know, there's a lot of seafood and stuff on this list. Mullusks, crustaceans, lobsters, you name it. It's on there. And Maine is actually the hardest hit in terms of like the products, these tariffs cover as a share of, you know, Maine's exports to Canada.

So Maine stands out. And, you know, it's these swing states. Pennsylvania is on there really high up in Ohio and all these states where, you know, you're, you know, they all have big exposure as much as Trump says, you know, we don't need anything from Canada. Well, Canada buys a lot of your stuff. Canada is the largest export destination for the majority of U.S. states. You know, once you're down in the southern states, it tends to be towards Mexico.

But even, I think for Texas, it's probably Canada because they ship so much oil up here and we ship so much oil down there. So if we look at, you know, these, especially these states that are kind of closer to the Canadian border, as you said, Maine. But also, you know, I noticed a lot of dairy and cheese goes in and weigh protein. And it's like, you know, well, no one think of the gym pros. Yeah, yeah. Well, you know, protein was a big target from Trump.

And it gets back to the whole, you know, one of the big issues is his complaint about Canada's, the structure of our dairy industry and the protections that we have through supply management. But, you know, protein really stood out on the U.S. list of goods and Canada's retaliated. with a lot of protein on there as well. And, you know, you're right. It's, you know, the Jimbrose are going to be suffering. Protein is in everything. You see it everywhere.

Every product doesn't even matter if, you know, there's not a chance that it's ever come near protein. It's got some sort of protein thing on the label. And it's getting more expensive. Way is getting crazy expensive. And so, you know, it's one of the ways consumers are definitely going to be feeling it. So if we're looking at these products, these are primarily states that are trading a lot with Canada that are near the northern U.S. border, how could that hurt Trump? Well, what you're trying to do is you're trying to get more allies on your side.

You're trying to put pressure on those states to then turn around and lobby the government, lobby the Trump administration to basically, you know, lower its tariffs on Canada. And you would see that already, especially Maine and states like that that have been hit by the tourism boycotts. They're all saying, please stop antagonizing. our largest supplier of tourists. So, but, but this whole equation was a little bit easier in 2018 when you had more checks and balances or the concept of checks and balances was a bit more alive in states.

And you had, you know, Congress needed to be, was it was much more involved in the, in the tariff process. And that's not the case anymore. So you, you're, the key to getting favorable treatment from Trump is you get in his ear somehow through Howard Lutnik or somebody. I guess what I'm saying is it's unclear whether this approach works as well as it did back in 2018, because it did work back then. You did see a lot of these states that were getting hit, kind of like really leaning. And the companies that were there were leaning on and lobbying harder for Canada's on Canada's behalf. The political equation here is certainly that that's, you know, hopefully will happen. But it's unclear whether it would have that same effect.

seems immune to these kind of pressures. You know, it doesn't seem to matter, bother him. If you tell him, your comments are blowing a hole in the tourism industry, doesn't seem to bother him. It's not one of the things that he thinks is important to the economy. No, we've certainly seen many, many barbs traded back and forth over the last couple days. Okay, so what are Canadian politicians saying these counterteriffs are going to achieve? Or what are they hoping that they will achieve? They're hoping it will put pressure on the U.S. administration to come back to the table and come back with what they would view as a more acceptable offer that gives Canada favorable trade more favorable than other countries, back to what it originally had status.

but also, you know, absent some of the issues that the Canadian side has said were real stumbling blocks, whether that's issues around cultural, you know, programming, French language programming, or the ability for Canada to make its own trade deals with other countries, all these issues that we're sticking points. It would be that by applying this kind of pressure, the administration falls in line. The challenge to that is that Canada does export, you know, rely very heavily on exports to the U.S. The U.S. does not rely as heavily on exports to Canada as part of its overall economy. So while there are a lot of states that, you know, for which Canada is a largest exporter, it's still a much smaller part of their economies than, say, Ontario's exports to the U.S. So it's, I don't know how much of this is political theater as well.

I mean, most of it is political theater. At the end of the day, trade wars are all about sounding tough and rhetoric and trying to just rally your country on your side while at the same time imposing these, you know, again, tariffs are a punishment on yourself. There's no other way of thinking about them. they may be a means to an end but it along the way you're going to hurt yourself so none of it makes sense the whole trade war doesn't make sense so we'll be right back jason i want to pick up on that idea that in a trade war and you said this a couple times that you end up hurting yourself by fighting back do we know at this point what kind of an impact these counter tariffs are going to have or could have on the canadian economy i mean economists have been trying to get

that, you know, model that out. You know, it definitely is going to have some sort of an impact. There's going to be job losses, whether that's our counter tariffs or it's the U.S. tariffs on, you know, the U.S. tariffs apply to about 5% of Canada's exports. So it's a fairly small, you wouldn't view that and say, oh, my gosh, the economy's at risk. But for those industries and businesses that are in those sectors that are hit, you know, a 50% tariff shuts down your business, you know, whatever U.S. exposure you have. So we're just starting to see models coming out on how many job losses

are going to be associated with that, what the inflation impact will be. I mean, what we do know is that this isn't the first time that Canada has imposed this level of counterteriffs on U.S. goods. We did it back last March and those were in place and they did have an impact and there was a slowdown in the economy. But Canada's economy has kind of hummed along a lot of more resilient than you would expect given, you know, what going up in a trade war against the most powerful economy on the planet. There was a, they call it a technical recession. If you've got two back-to-back quarters of negative growth, it really wasn't in the end of recession because, you know, growth rebounded quite well after that. So I guess using that as a model, there's

definitely going to be a hit that we experience. It probably won't hopefully be as, severe. And ideally, everybody comes to their senses before September 8th or soon after, and we start to see genuine talks and some sort of resolution just on lifting some of these tariffs, never mind getting into the heavier weeds of sorting out the, you know, Kuzma deal and that. That's for another day. That sounds like that's a long and arduous journey ahead. But also, I mean, before September 8th and crucially also before January 1st, which is when those 50% tariffs, the U.S. tariffs on Canadian autos, Trump is saying, would come into effect. But we'll talk about autos another day.

That's such a long runway. And it's so long that you kind of got to wonder whether it's how serious that even is, you know, if you're saying, well, I'm going to impose these tariffs three or four months from now. It's not as if in the meantime anybody's going to move plants to the U.S. You can't. So he's just giving himself a lot of runway. for hopefully these talks to resume. Right.

But in the meantime, the prospect of all of these changes coming into effect, I think is very scary for a lot of people, for business owners, for workers. It's not a rosy picture in front of us. What have we heard from the government so far about their plan to, you know, whether it's offsetting, whether it's some kind of economic support? What are they talking about here? I mean, we got to see that today. The government announced about $7.5 billion in support packages.

So that includes easier access to employment insurance, loan programs for businesses, more funding for regional development agencies and stuff like that. But the government has also said we're going to be spending more in these supports than we're going to be bringing in from the tariff revenue that comes in. I have seen one estimate that Canada will probably bring in. about $7 billion in tariff revenue if these tariffs stay in place for the whole year. But chances are that $7.5 billion support package is going to get a lot larger than that. If we're talking about these tariffs staying in place for a year,

if this all stays place for a year, then you are getting into the Canada's economy would really be taking a hit. You know, would it go into a recession? I don't know if it would, you know, again, the resilience has surprised me time and again. but you can also see an extreme slowdown and real uncertainty, you know, if this goes on for a year, you're talking about investment decisions being canceled or postponed businesses not. It's almost not a question of like what kind of job losses you are, you experience up front. It's what kind of missed opportunities, you know, we have over the next year because you would see fewer businesses hiring, fewer businesses investing, fewer outside businesses coming in and opening a, you know,

Carney's got his big, you know, kind of investors, foreign investor summit coming up. And, you know, that idea is supposed to be bringing in all this outside, you know, internal but external funding. And he's going to do that in an environment where you have no certainty about what the training relationship with Canada's largest training partner is going to be. So we've been talking about one form of retaliation, which is, you know, the retaliatory tariffs that have been announced Tuesday morning. Another method that some premiers especially have talked about is this idea of kind of blocking resources that the U.S. needs from Canada. So, you know, on Monday you have Ontario Premier Doug Ford talking about stopping the flow of electricity from Ontario to American states.

He also mentioned other resources from other provinces. We have him talking about Trump directly. He says he doesn't eat Canada. I'd love to see he wants to take our auto sector. I'd love to see him run cars without any oil. I'd love to see, you know, and try to grow vegetables and fruit and everything without the potash. I'd like to see when we have our critical minerals.

Matter of fact, high-grade nickel. that 65% comes from Ontario for their military, for their manufacturing. So the U.S. buys resources like Potash from Saskatchewan and oil from Alberta, but these resources were not part of this retaliation that we saw on Tuesday. Could this question of leveraging resources realistically be on the table? It would only be on the table if you had a massive change of heart by political leadership in Alberta and Saskatchewan. And both premiers have said, no, that's not on the table. Partly also because, you know, yes, Trump says all the time,

we don't need anything from Canada, and yet, you know, we supply, we're the largest exporter of oil to the U.S. They clearly need a whole bunch of refineries only run on Canadian oil. But the flip side of that is we also rely on the United. the U.S. for refined petroleum and gas. And we import a lot of that. And we do import, the whole pipeline that runs from Western Canada, Eastern Canada, literally runs right through the U.S. There are, once you start getting into that, hey, we're going to turn off the valve so you don't have access to this, that's a game that the Americans, I'm sure, would be very

eager to, to play as well. You also do then Canada's oil exports are a massive part of the economy. And you'd be shutting that off. And, then you would have a recession. There's no question. But it does, it's rewarding to, you know, to hear it and think that, you know, maybe Trump will get that message that, oh, you know, no matter how many times you say you don't need, the U.S. doesn't need what we have. You do, you know, maybe eventually that'll sink in.

I don't, I think we're past the point where it will sink in. He also, it's impossible to think that he doesn't realize this. So when he says all, when he just keeps saying that over. and over and over again. You got to know that he knows it's foolish. You know, and the other thing about like autos that Ford had brought up, he focused on like oil to run your cars. But, you know, the U.S. auto industry, we're their largest customer, export customer,

outside of the United States. We buy more cars than like, you know, China does of American vehicles. We buy more cars than all of Europe, I think. You know, and if you start basically saying, well, we're going to shut your auto industry down and all the American companies are going to pull out. I think you'd start to see, you know, maybe not drivers of giant pickup trucks and stuff like that, you know, but certainly I think you'd start to see that consumer boycott effect, roll over into that.

And, you know, so clearly like the GMs and Ford's of the world are guaranteed up there in Washington all the time saying, please just rain it in, like, you know, end this now. End this now. Their stocks all dropped immediately after Trump started talking about the 50% tariffs on auto parts. And it would devastate those companies. And it benefits and it benefits their rivals who then can build their cars cheaper and sell their cars cheaper. So it's like everything in a trade war, you know, the logic is backwards. But it doesn't seem to stop them.

So I think this takes us to a bigger question of, you know, when we think about what Canadians are being asked to do right now, we're really getting this message that buying Canadian matters right now. And there's, in theory, going to be a practical point to that because, you know, in theory, starting September 8th, there's going to be this 50% tariff on a lot of things, including, you know, clothes and food and all sorts of things that we buy on a day-to-day basis. So maybe it will become cheaper to buy things that are made in Canada if you weren't doing that before. Do we know anything about whether that message, which is, you know, it's been strong in the last couple days, but it's been there for the last year and a half. It's been there from the beginning. Is there weight behind that? Do we know if people are actually buying Canadian more? I mean, you certainly haven't heard the grocery chains talk about it as much as they were before.

They were highlighting this on a regular basis that Canadians are buying more. more Canadian and skipping over the U.S. products. I've heard from some businesses as well who, you know, were facing tariffs through the 50% Trump tariffs, the latest ones, who said to me, you know, in the early days of the trade war, there really was this like they could feel it, this resurgence, this surge of patriotic buying

and domestic, you know, buy Canadian and stuff. And that is waned. And, you know, and that's, I guess, to be expected as well. Well, you know, it's hard to keep your elbows up for that long. They get tired. And you have all these deals and incentives like travel. I mean, travel to the U.S. was starting to inch back up a little bit, not hugely. It wasn't far from getting back to what it was prior to the trade war.

But you did see some, you know, some people just saying, wow, the deals are so great. I'm going to do this and take that trip to Disney World. But I also think that this is probably going to reinvigorate that. You know, certainly see it online. You know, if you go on Reddit, the Buy Canada subreddit is all of a sudden sprung back to life and they've got a new boundless energy to it. And I feel like the more Trump says about the 51st state continues that rhetoric, the more damage seems to befall the Canadian economy from these tariffs, that you might start to see that comeback again. But the start of the trade war just really solidified that sentiment. And it feels more dispersed now and not nearly as cohesive as it was at the start.

So we'll have to see if this new round of belligerents has the same effect. Yeah. Is there any universe in which this tariff environment that would potentially force Canadians to buy fewer American products in those areas? Could that actually make Canada's kind of domestic production economy more robust? Like, are there any possible silver lining here? It's hard to see. I mean, anytime you take competition out of the market, you know, the remaining companies serving that market are going to raise their prices. And so that's what will happen.

So, yeah, you might end up with, you know, domestic suppliers being able to step up and meet some of that demand. But they are going to be able to raise their prices because there's, less competition in that marketplace. You know, and at the more industrial level, because a lot of the stuff on this, I mean, we're talking about clothes and honey and a lot of this is steel and, you know, industrial equipment and that.

And even on that point, the Canadian government is keeping basically this remission system in place. And what that means is, you know, if you're a producer of a, you know, a manufacturer and you can't get that particular steel widget, that's a particular type of steel rebar or whatever from any Canadian suppliers, because it just doesn't exist, you're able to apply for this remission and import it from the states without the tariff. And the government has explicitly said they're going to keep that in place.

So that will help. But it also kind of like is at odds with the whole point of this. So again, it's all illogical, but again, trade wars are illogical. Jason, thank you so much for being here today. Thank you. That was Jason Kirby, a reporter for the Globe's report on business. That's it for today. I'm Mikhail Stein, in for Cheryl Sutherland.

Kasha Mihailovich produced this episode. I produced the show, along with Madeline White and Rachel Levy McLaughlin. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza, is our executive editor. Thank you for listening.