Canada Signals Political Aim With Sept. 8 Tariffs as US Trade Fight Escalates

Canada escalated its trade fight with the US by announcing retaliatory tariffs after Washington imposed duties of as much as 50% on Canadian goods. President Donald Trump added to the tension by saying he was considering renaming Lake Ontario, which borders the two countries, as “Lake America.” The dispute is stoking concern about the economic fallout on both sides of the border.

Canada Announces Retaliatory Tariffs

Canada’s Finance Department said Aug. 25 it will impose tariffs of 15% to 50% on about 700 categories of US goods starting Sept. 8. The move came after the US invoked Section 338 of the Tariff Act on Aug. 22 and announced 50% tariffs on $20 billion of Canadian products.

Canada set 50% tariffs on US steel and aluminum, along with furniture and clothing. It imposed 25% duties on home appliances, cheese and fish, and 15% tariffs on air conditioners and agricultural machinery parts. Canadian government officials told BNN Bloomberg that Ottawa matched both the scope and the rates of the US measures. The total value of the targeted goods was also set at C$27.6 billion, equivalent to $20 billion.

Industry Minister Melanie Joly said the list includes products that could hit specific US states. Canada was being “smart” and “strategic” in applying political pressure, she said. The goal was to target areas that matter politically ahead of the US midterm elections in November. The Wall Street Journal said Canada’s selection of goods, including processed cheese from Wisconsin, seafood from Maine, and washers and dryers, suggested an effort to influence swing regions.

The timing of the tariffs also carried a political message. Prime Minister Mark Carney did not describe the start date simply as Sept. 8, instead calling it “the Tuesday after Labor Day,” a reference to Labor Day on Sept. 7. The phrasing could be read as a nod to the point when the US midterm campaign begins in earnest.

Even so, Canada appeared wary of opening a full-scale trade war with the US. Energy products including crude oil, the biggest component of bilateral trade, as well as minerals such as potash, were left out of the retaliation package. Finance Minister François-Philippe Champagne told reporters the aim was a response that was both strategic and proportional.

Canada also faces risks if the tariff conflict worsens. A broader trade war would add to inflation and other economic strains at home. Ottawa must also consider how the dispute could affect renegotiation of the US-Mexico-Canada Agreement, or USMCA.

Trump Accuses Canada of ‘Ripping Off’ the US

Trump has kept up his attacks on Canada. In a Truth Social post on Aug. 25, he said he was seriously considering changing the name of Lake Ontario. “Since we’re probably not going to be doing much business with the Province of Ontario anymore, I am seriously considering changing the name of Lake Ontario to Lake America,” he wrote. The comment came a day after Ontario Premier Doug Ford said former President Ronald Reagan “would vomit” if he saw Trump’s actions.

The White House said in a statement issued in Trump’s name that Canada had run an average annual goods-trade surplus of about $50 billion with the US over the past decade. In his Truth Social post, Trump put the figure at $60 billion a year.

The US statement did not mention that it posted a $27.7 billion surplus in services trade with Canada last year alone. Much of the US goods-trade deficit with Canada also reflects large purchases by American refiners of Canadian heavy crude, which trades below West Texas Intermediate. Excluding crude oil, US goods trade with Canada shifts to an annual surplus of about $50 billion. The statement also said Canada had blocked imports of US autos and alcohol with tariffs, but those measures were proportional responses after the US acted first.

Trump said the US had proposed sweeping tariff cuts last week on a broad range of products including steel, aluminum, automobiles and lumber, but Canada rejected them outright. “The only countries that chose retaliation instead of negotiation are China and Canada,” he said.

Lee Sang-eun, Washington correspondent, Hankyung.com, selee@hankyung.com