Summary
- US effectively bans Canadian alcohol, motorcycle, dairy imports from September 29
- Canada’s counter-tariffs that came into effect overnight covered $20 billion of US goods
- Canadian tariffs are a response to moves by Trump
WASHINGTON, (Reuters) – The United States banned a broad swath of Canadian alcoholic beverages, motorcycles and dairy products from import on Tuesday, sharply escalating an already acrimonious trade spat.
The import bans, which go into effect on September 29 and were published on the White House’s website, came after Canada’s own retaliatory tariffs on U.S. goods took effect after midnight on Tuesday.
Those Canadian levies themselves followed 50% tariffs that the United States imposed on some $20 billion of Canadian goods last month, after several rounds of negotiations collapsed.
The breakdown has widened a rift between the longtime allies, who have blamed each other for the failed talks, spurred Canadian Prime Minister Mark Carney to urge a further shift away from Canada’s biggest trading partner, and cast doubt on the viability of the U.S.-Mexico-Canada Agreement.
“We have everything we need to pivot and prosper,” Carney said on Tuesday in a video posted on YouTube.
“That pivot will come at a cost. There’s always a cost to action. But it doesn’t come close to the cost of standing still,” he said.
The U.S. bans appeared to cover most alcohol products, including beer and various types of wine, whisky, bourbon, rum, vodka, vermouth, tequila, mezcal, and brandy. The dairy ban covers whey protein, invert molasses, cane molasses and non-alcoholic beer, per notices on the White House’s website.
In addition to the import bans, various cheese products were added to a list of products subject to a 50% tariff, but not banned outright. Some paper, aluminum, wood, furniture, lighting and other products were also added to the list.
A U.S. official said President Donald Trump’s pre-existing threat to increase tariffs on Canadian autos from 25% to 50% on January 1 remained in effect. The official added that U.S. Trade Representative Jamieson Greer had spoken with Dominic LeBlanc, Canada’s minister responsible for bilateral U.S. trade, over the past couple of days, and the pair were expected to speak again in the coming days to see if there was an alternative path for the two countries.
In a social media post on Tuesday night, LeBlanc criticized the latest U.S. measures and said he was in contact with Greer regarding a path forward.
“As has been the case for the last 18 months, our first priority remains on protecting and supporting Canadian workers, farmers, families, and businesses from these unjustified actions,” he wrote.
OTTAWA STRIKES BACK
Ottawa’s retaliatory measures, which in turn provoked Washington’s move on Tuesday night, were designed to put economic and political pressure on Washington, Canadian government officials said.
Those counter-tariffs cover some $20 billion of U.S. goods, with duties ranging from 15% to 50% across products from steel and furniture to clothing and electronics, and are expected to hit sectors in some competitive states such as Michigan and Ohio, ahead of U.S. midterm elections in November.
While the tariffs affect a small amount of exports compared with total trade between the U.S. and Canada, some analysts worry the standoff could destabilize the U.S.-Mexico-Canada Agreement, the free-trade pact that succeeded NAFTA. Together they have underpinned commerce across North America for decades.
“What we are worried about is an escalatory spiral,” said Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance and a member of Carney’s advisory committee on bilateral U.S. economic relations.
“But at the same time, we totally understand that the prime minister needs to find areas of leverage.”
Trump has been lobbing various attacks at Canada on Truth Social in recent days.
On Monday, he said Canadian private jet maker Bombardier would no longer be allowed to sell its planes in the United States unless it started manufacturing in the country.
He also shared a map of North America draped in the U.S. flag, including Canada and Mexico, and an AI-generated image reviving a running jab at Carney, calling him “Governor,” a reference to his repeated taunt that Canada should become the 51st U.S. state.
On Tuesday, hours before the latest import bans, Trump directed the General Services Administration, a U.S. government body responsible for providing services for the federal government, to coordinate with the U.S. Trade Representative and “REMOVE Canadian-origin products from GSA’s Multiple Award Schedules unless Canada restores full and fair reciprocity for American Farmers and Companies.”
VARIOUS SECTORS HIT
Trump’s tariffs implemented last month hit sectors including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment, covering $20 billion, or 5%, of Canadian exports to the U.S.
A Sapporo spokesperson said the brewer is considering moving a limited amount of production of non-alcoholic drinks from Canada to the U.S. due to tariff risks, but no final decision has been made.
Sapporo owns Ontario-based Sleeman Breweries. Canada accounts for more than half of the Japanese firm’s overseas beer sales.
According to Canadian and U.S. government data, Canada has shipped almost 68% of total exports to the U.S. this year, out of which roughly 80% moved duty-free due to exemptions under the USMCA pact. Protections under the agreement have provided the domestic economy some resilience.
Last month’s tariffs, imposed under a Depression-era U.S. law, do not allow Ottawa to exercise USMCA exemptions.
Concerns about the USMCA’s future have fueled uncertainty about investment and growth, as Canada wages a trade war against an economy 13 times its size.
Polls also show Carney has broad support from Canadians, but that could disappear within months as the consequences of the trade war sink in, according to political analysts.
A new poll from Angus Reid on Tuesday showed that approval of Carney’s performance jumped 11 points to 62% from an August poll.
Meanwhile, just 20% of Americans approved of Trump’s tariffs on Canadian goods, a Reuters/Ipsos poll found.
Trump threatened last month to raise U.S. tariffs on all cars, trucks and automotive parts from Canada to 50% starting January 1, and signed an executive order renaming Lake Ontario as Lake America.
Reporting by Promit Mukherjee in Ottawa and Gram Slattery and Ryan Jones in Washington; Additional reporting by Yusuke Ogawa in Tokyo; Editing by Caroline Stauffer, Rod Nickel, Deepa Babington, Andrea Ricci and Stephen Coates
