In early 2025, trade relations between Canada and the United States became the focus of global attention after President Donald Trump announced sweeping tariffs on Canadian imports. Most Canadian goods entering the US were suddenly subject to a 25% tariff, while Canadian energy products faced a reduced 10% duty. This move, intended by the US administration to reduce trade deficits and spur domestic production, was met with immediate concern in Ottawa.

Canada responded forcefully, imposing its own 25% retaliatory tariffs on $30 billion worth of US goods—expanding to $155 billion after a few weeks—to protect its industries and send a strong message about the importance of fair trade. These tariffs targeted iconic American products, including liquor, vegetables, clothing, shoes, and household appliances.

The newly imposed trade barriers quickly disrupted cross-border supply chains in steel, aluminum, automotive, and various consumer goods. Both governments put in place support programs for affected businesses. Market volatility followed, and companies on both sides of the border scrambled to adapt to the new economic reality.

Despite exemptions for trade covered under the USMCA (United States–Mexico–Canada Agreement), the tariffs left less than 15% of trade flows unaffected by the new duties as of August 2025. Canadian policymakers and business leaders warned that the tariffs threatened jobs and economic growth in both countries—especially in heavily integrated sectors such as automotive manufacturing and mineral processing.

As negotiations continued throughout the year, Canada gradually lifted some counter-tariffs on American goods effective September 1, 2025, while maintaining measures on vulnerable sectors like steel, aluminum, and automobiles. Talks remain ongoing, with both countries seeking to avoid further escalation and to balance national interests with one of the world’s largest bilateral trading relationships.