The United States has widened its trade confrontation with Canada, banning imports of some Canadian dairy products, motorcycles and most alcoholic beverages after Ottawa imposed retaliatory tariffs on about $20 billion worth of US goods.
US President Donald Trump also moved to exclude Canadian products from major, long-term US government contracts, taking the dispute beyond tariffs as relations between the two longtime allies continue to deteriorate.
The latest US restrictions, due to take effect Sept 29, cover various Canadian wines and spirits, some motorcycles and mopeds, dairy products including whey, and certain types of molasses.
Canada's new tariffs took effect early Tuesday and cover hundreds of US products, including steel, aluminum, cheese, appliances, clothing, cosmetics and farm equipment. The rates range from 15% to 50%.
Canada says the measures match US tariffs on a dollar-for-dollar and rate-for-rate basis and affect about 6% of the $333.6 billion worth of goods the United States exported to Canada last year.
Eight of Canada's 10 provinces have also maintained restrictions or bans on US alcohol. The Distilled Spirits Council said US spirits exports to Canada have fallen more than 70% year over year following those measures.
Trump directed the US General Services Administration to bar Canadian products from large federal contracts until Canada provides what he called “full and fair reciprocity” for American goods.
The latest escalation follows the collapse of Canada-US trade talks on Aug 21. Since then, Trump and his administration have stepped up tariffs and threats against Ottawa.
Canadian Prime Minister Mark Carney has warned that US demands could weaken key Canadian industries and undermine the country's economic independence. Trump's repeated comments about making Canada the 51st US state have instead fueled nationalist sentiment and strengthened support for Carney.
Carney said Canada's response is increasingly focused on reducing its dependence on the United States.
“It’s about ensuring that no country can hold us hostage,” he said.
The dispute is particularly significant because the two countries have deeply integrated economies and long-standing defense and security ties. Before relations deteriorated, around 400,000 people crossed their shared border each day.
Carney is also seeking closer economic ties with the European Union as Canada looks to diversify its trade relationships. He is scheduled to address the European Parliament next week.
Trump's trade pressure has also raised concerns about Canada's auto and steel industries. He has threatened 50% tariffs on Canadian vehicles, auto parts and steel next year if Ottawa does not comply with US demands.
Canadian officials warn such tariffs could severely disrupt North American manufacturing supply chains, where parts and finished vehicles cross the border multiple times during production.
Despite Canada's economic dependence on the US market, Ottawa has some leverage. US refineries rely on about 4 million barrels of oil a day from Canada, while American farmers depend heavily on Canadian potash fertilizer.
Canada's economy grew at an annualized rate of 3.2% in the second quarter, compared with 1.5% growth in the United States.
Canadian Industry Minister Mélanie Joly expressed confidence that Ottawa could prevail.
“I’m convinced that we will be able to show the world that Canada will win this trade war,” she said.
