The White House escalated tensions in the ongoing Canada-U.S. trade war by implementing a ban on Canadian dairy, motorcycles, and certain alcohol products. Alongside this ban, a 50 per cent tariff was imposed on various other items. Economists suggest that while the overall impact on the Canadian economy may not be significant based on their calculations, certain industries will feel the effects, causing concern for business owners.
The recent retaliatory actions by the White House were in response to Canada’s counter-tariffs. Derek Holt, vice president of capital markets economics at Scotiabank, estimates that the new tariffs will affect around $3 billion worth of Canadian goods, with removed tariffs totaling approximately $2 billion. Despite Canada exporting over $527 billion worth of goods to the U.S. in 2025, the difference in impact is considered marginal.
Holt also notes that the bans on alcohol, dairy, and motorcycles will have minimal effect since Canada’s exports in these categories are relatively low. The ban on alcohol, which amounted to $550 million in exports to the U.S. last year, is projected to impact only $700 million worth of Canadian exports. This move is seen as more symbolic by the U.S. administration rather than substantial.
The surge in oil prices, reaching over $100 due to Middle East tensions, poses a greater economic risk than the new U.S. measures, according to experts. Chief economist Doug Porter from BMO agrees that the tariffed and delisted items balance out at about $2 billion, maintaining the country’s position prior to the announcement. However, the targeted industries or regions will still face challenges, impacting business owners negatively.
While the tariffs may not have a significant direct impact, Tu Nguyen, an economist at RSM Canada, highlights the real consequences lie in the message conveyed to business owners. The uncertainty and dwindling business confidence resulting from the escalating trade tensions could have a more substantial indirect effect. The sudden enforcement of some measures next week without significant lead time adds further pressure on businesses to adapt quickly, intensifying concerns for stakeholders on both sides of the border.