Canada Retaliates Against US Tariffs With Levies Timed for ‘Tuesday After Labor Day’

Canada escalated its trade fight with the US by announcing retaliatory tariffs after Washington imposed a 50% levy on Canadian goods. President Donald Trump added to the tensions by saying he wanted to rename Lake Ontario on the US-Canada border “Lake America.” As the dispute turns increasingly personal, concerns are mounting about the economic fallout.

Canada Announces Retaliatory Tariffs

Canada’s Finance Ministry said Aug. 25 it will impose tariffs of 15% to 50% on about 700 categories of US goods starting Sept. 8. The move came after the US invoked Section 338 of its tariff law on Aug. 22 and announced a 50% tariff on $20 billion of Canadian products.

Canada set 50% tariffs on US steel, aluminum, furniture and clothing. It imposed 25% duties on home appliances, cheese and fish, and 15% on air conditioners and agricultural machinery parts. Canadian government officials told BNN Bloomberg that Ottawa matched both the US tariff rates and the products targeted. The measures cover goods worth C$27.6 billion, or $20 billion.

Industry Minister Melanie Joly said some of the products were chosen to hit specific US states. Canada was acting “smartly and strategically” to apply political pressure, she said. The strategy amounts to a targeted strike ahead of the US midterm elections in November. The Wall Street Journal said Canada appeared to be trying to sway battleground areas by targeting items such as processed cheese from Wisconsin, seafood from Maine, and washers and dryers.

The timing of the tariffs also appeared deliberate. Prime Minister Mark Carney did not say they would take effect on Sept. 8. Instead, he called it “the Tuesday after Labor Day,” referring to the holiday on Sept. 7. The phrasing can be read as a nod to the point when the US midterm campaign begins in earnest.

Even so, Canada appeared wary of entering an all-out trade war with the US. Energy products such as crude oil, which account for the biggest share of bilateral trade, and minerals including potash were left out of the retaliation package. Finance Minister François-Philippe Champagne told reporters the goal was a “strategic” and “proportionate” response.

Canada also faces economic risks if the tariff fight intensifies, including higher prices. Ottawa must also consider how the dispute could affect talks to renegotiate the US-Mexico-Canada Agreement, or USMCA.

Trump Accuses Canada of ‘Ripping Off’ the US

Trump has kept up his attacks on Canada. In a Truth Social post on Aug. 25, he said he was considering changing the name of Lake Ontario. “Because I don’t think we’ll be doing much business with the province of Ontario anymore, I am seriously considering changing the name of Lake Ontario to Lake America,” he wrote. The post came after Ontario Premier Doug Ford said a day earlier that former President Ronald Reagan would “vomit” if he saw Trump’s actions.

In a statement released under Trump’s name on Aug. 25, the White House said Canada has run an average annual goods-trade surplus of about $50 billion with the US over the past decade. In his Truth Social post, Trump put the figure at $60 billion a year.

The US did not mention that it posted a $27.7 billion surplus in services trade with Canada last year alone. Most of the US goods-trade deficit with Canada also reflects large imports by American refiners of Canadian heavy crude, which is cheaper than West Texas Intermediate. Excluding crude, US goods trade with Canada turns into an annual surplus of about $50 billion. The White House statement also said Canada had blocked imports of US autos and alcohol by imposing tariffs. But those steps were proportional measures taken after the US acted first.

Trump said the US last week had offered sweeping tariff cuts on a broad range of goods, including steel, aluminum, automobiles and lumber, but Canada had rejected them outright. “The only countries that chose retaliation over negotiation are China and Canada,” he said.

Lee Sang-eun, Washington correspondent, Hankyung, selee@hankyung.com