Canada-U.S. Trade War 2025: How New Tariffs Will Impact Prices, Jobs, and Industries
The ongoing Canada-U.S. trade war has entered a new phase. Starting Tuesday, U.S. tariffs on Canadian goods will take effect, while Canada retaliates with counter-tariffs on $155 billion worth of U.S. products.
The Impact on Canada’s Economy
The Bank of Montreal warns that the tariffs could lead to a modest recession if they stay in place for a year. The Canadian dollar may weaken, supply chains could face disruptions, and consumer prices may rise as businesses adjust to the new trade environment.
Cost of Living
Canada’s 25% tariffs on U.S. imports will raise grocery prices, appliance costs, and vehicle expenses. Tu Nguyen, an economist at RSM Canada, notes that fewer U.S. products will enter the market, reducing selection while increasing costs.
“The depreciation of the Canadian dollar might help exporters, but it will hurt businesses and consumers at home,” Nguyen explained.
Unemployment and Job Losses
Industries heavily reliant on trade, such as manufacturing, tourism, and transportation, may suffer job losses. Reduced demand for goods in both countries could force businesses to cut staff and limit operations. This could further impact services industries, including restaurants, hospitality, and entertainment.
Auto Industry Faces a Major Blow
The North American auto industry is deeply integrated, and these tariffs could disrupt supply chains across Canada, the U.S., and Mexico.
- Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, says tariffs will have a serious impact on operations.
- Flavio Volpe, of the Automotive Parts Manufacturers’ Association, warns that higher car prices will affect both sides of the border.
- Consumers in the U.S. could see vehicle costs rise by thousands of dollars due to increased prices for parts.
Steel and Aluminum Sectors Sound the Alarm
The United Steelworkers Union argues that tariffs on Canada are damaging to both economies. Canada and the U.S. trade $1.3 trillion annually, and disrupting this hurts workers on both sides.
- David McCall, international president of the United Steelworkers, warns that the tariffs threaten industrial stability.
- Jean Simard, president of the Aluminium Association of Canada, says prices will immediately increase for American manufacturers.
Canadian Provinces Ban U.S. Alcohol
In a show of support for Ottawa’s countermeasures, Ontario, British Columbia, Manitoba, Newfoundland and Labrador, and Nova Scotia are removing American alcohol from liquor stores.
- The LCBO in Ontario will stop selling U.S. wine, beer, spirits, and seltzers starting Tuesday.
- British Columbia will halt imports from red states while Newfoundland and Labrador urges consumers to buy Canadian.
Energy Sector Braces for Impact
While most goods face 25% tariffs, Canadian energy exports to the U.S. will have a 10% tariff. However, industry leaders believe this will have a muted impact due to pre-negotiated pricing strategies.
- Paul Colborne, CEO of Surge Energy, says the oil sector expected this move and prepared in advance.
Canadian Farmers and Ranchers Hit Hard
The Canadian Meat Council warns that 35% of Canadian beef exports go to the U.S. market. If tariffs reduce demand, it may take time to find new buyers.
- Russ Mallard, president of Atlantic Beef Products, says the short-term effects could lower beef prices but create long-term instability.
What’s Next?
The trade war is far from over. In three weeks, Canada will impose a second round of tariffs on an additional $125 billion in U.S. goods. The government will also consider new economic measures to mitigate the damage. Until the U.S. lifts its tariffs, Canada’s response will remain firm.
For more updates, visit the Government of Canada’s official trade website.
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