Canada's response to U.S. tariffs on Canadian goods

Background information

On March 4, 2025, U.S. tariffs of 25 per cent on Canadian goods, and 10 per cent on energy exports from Canada imported into the U.S. from Canada, came into effect. The U.S. has indicated that this action is in response to national security concerns, particularly related to illegal immigration and the flow of fentanyl and other drugs into the U.S.

The U.S. has also announced that it may impose additional 25 per cent tariffs on certain industries, including steel, aluminum and autos on March 12.

Canada-U.S. trade

Canada and the United States have the world's most comprehensive and dynamic trading relationship, which supports millions of jobs in both countries. We are each other's largest trading partners with US$2.5 billion worth of goods and services crossing the border every day. 

What is an import tariff?

Impacts of U.S. tariffs

Individuals

The U.S. tariffs will impact Canadians and Americans alike. They will increase costs for consumers, put thousands of jobs at risk, and weaken North America's competitiveness in the global economy. Tariffs will upend production at U.S. auto assembly plants and oil refineries, and raise costs for American consumers—at gas pumps and grocery stores, whether for products made in Canada or U.S.-made products that use Canadian materials, putting American prosperity at risk.

Businesses

Canadian companies that rely on cross-border supply chains will face logistical and financial challenges. Businesses will likely see reduced demand from U.S. buyers due to increased prices, slowing overall economic growth in Canada.

With many U.S. businesses relying on Canadian imports, tariffs on Canadian goods and materials will raise prices considerably for American businesses and consumers, leading to inflationary pressures in the U.S. Tariffs will also disrupt American supply chains, which could cause delays and increased costs, making American-made products more expensive.

Due to the sudden uncertainty around trade relations, businesses on both sides of the border could delay investments, further slowing growth.

What is Canada's plan in response to U.S. tariffs?

On March 4, 2025, the U.S. imposed tariffs of 25 per cent on Canadian exports, and 10 per cent on energy product exports from Canada.

Canada has responded to the U.S. imposition of tariffs on Canadian goods by introducing a first set of countermeasures designed to compel the U.S. to remove the tariffs as soon as possible.

Canada's countermeasures include:

• Imposing tariffs on $30 billion in goods imported from the U.S., effective March 4, 2025.
  • Canada's countermeasures list includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and certain paper products.
• Announcing that the government intends to impose tariffs on $125 billion in imports from the U.S.
  • This second round of tariffs will be subject to a 21-day comment period prior to implementation, and includes products such as electric vehicles, trucks and buses, certain fruits and vegetables, aerospace products, beef, pork, and dairy.

All options remain on the table as the government considers additional measures, including non-tariff options, should the U.S. continue to apply unjustified tariffs on Canada.

More information on Canada's tariff response

Impacts of Canada's tariffs

Canadian countermeasures are about protecting and defending Canada's interests, consumers, workers, and businesses. Applying tariffs on U.S. goods being imported into Canada raises the prices of those goods for sale in Canada, making them less desirable for Canadian consumers to purchase. By raising prices and reducing their demand by Canadian consumers, this sends a message to U.S. businesses and the U.S. government on the need to reverse the imposition of tariffs, for the benefit of both Canadians and Americans. 

At the same time, to help reduce the financial burden on Canadian consumers as a result of higher prices on American products, the Government of Canada encourages Canadian consumers to switch from purchasing American products to those made in Canada. This will also help support Canadian businesses by increasing their domestic sales, especially if their exports are impacted by U.S. tariffs.

Support for Canadian businesses and workers

As a first line of defence, Canada's robust system of economic support programs is available to help businesses and workers directly impacted by U.S. tariffs. This includes financing and advisory supports for businesses through financial Crown corporations and supports for workers.

Some of the supports that are already available include:

• The Canada Small Business Financing Program, which helps small businesses obtain loans from financial institutions by sharing the risk with lenders.
• Trade Commissioner Services, which help businesses grow and diversify their business operations by connecting them with funding and support programs.
• A remission process, which provides exceptional relief from the tariffs imposed as part of Canada's immediate response, as well as any future tariff actions.

To support our businesses and ensure they have the liquidity they need through this turbulent time, we will be:

• Launching the Trade Impact Program through Export Development Canada. The program will deploy $5 billion over two years, starting this year, to help exporters reach new markets for Canadian products and help companies navigate the economic challenges imposed by the tariffs, including losses from non-payment, currency fluctuations, lack of access to cash flows, and barriers to expansion.
• Making $500 million in favourably priced loans available through the Business Development Bank of Canada to support impacted businesses in sectors directly targeted by tariffs, as well as companies in their supply chains. Businesses will also benefit from advisory services in areas such as financial management and market diversification.
• Providing $1 billion in new financing through Farm Credit Canada to reduce financial barriers for the Canadian agriculture and food industry. This lending offer will help address cash flow challenges so that businesses can adjust to a new operating environment and continue to supply the high-quality agricultural and food products that Canadians rely on.

For additional resources on expanding your business into new markets, click here.

There is also the Business Benefits Finder. Answer a few questions to get a personalized list of support.

Along with supporting businesses, we are also introducing temporary flexibilities to the EI Work-Sharing Program to increase access and maximum agreement duration.

• The Work-Sharing Program provides EI benefits to employees who agree with their employer to work reduced hours due to a decrease in business activity beyond their employer's control. This helps employers retain experienced workers and avoid layoffs and helps workers maintain their employment and skills while supplementing the reduced wages with EI benefits.

The government will closely monitor impacts across sectors and the economy, and will bring forward additional measures to support workers and businesses as needed.

How can Canadians help?

Buying products made in Canada or choosing Canada in other ways, like taking advantage of the country's exciting tourist destinations, is a great way to support Canadian entrepreneurs, Canadian workers, and communities.

When shopping, check products for "Made in Canada" or "Produced in Canada" labels, and consider buying them instead of other available products.

• How to identify Canadian food (Canadian Food Inspection Agency).

You can also choose to support your local businesses, producers, and farmers instead of larger shops.

• Find tips on supporting local businesses (Office of Consumer Affairs).