Canada imposes 50% tariffs on US aluminium and steel, with a $5.4b domestic support package as trade tensions escalate

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Canadian Prime Minister Mark Carney has announced new retaliatory tariffs on US goods after trade talks between the two countries collapsed, with US aluminium and steel products facing tariffs of 50 per cent. Canada said the measures would match the latest US tariffs dollar-for-dollar and also announced a CAD 7.5 billion (USD 5.4 billion) support package for businesses affected by the trade dispute. 

The move marks a change in Carney’s approach towards the US. A year ago, Canada had removed many of its retaliatory tariffs on US goods in an effort to improve relations and bring both sides back to the negotiating table. Carney had also made other concessions, particularly on digital policies, while trying to reach a trade agreement.

However, talks between the two countries broke down on Friday. Carney said it had become clear to him that US officials were seeking to put pressure on key Canadian industries. This included aluminium, steel, and automobile manufacturing.

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Canadian government stated in a news release, “The US proposed new terms that were not in Canada’s best interest, basically, asking too much of Canada, and offering too little in return.” 

Canada will now double its existing counter-tariffs on US aluminium and steel products to 50 per cent. The new 50 per cent tariffs will also cover US-made furniture, clothing and apparel, video-game consoles, smartphones and other electronics.

The retaliatory measures will cover around USD 20 billion worth of annual US imports, broadly matching the value of the latest US tariffs on Canadian products under the 1930 Tariff Act. This represents about 6 per cent of Canada’s goods imports from the US last year. The Canadian government said the measures are aimed at supporting domestic companies affected by the new US tariffs rather than generating additional revenue.

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The new duties will take effect on September 8. Other US products, including certain aluminium and steel derivative products and appliances, will face 25 per cent tariffs. Selected US machinery, industrial tools and farm equipment will be subject to 15 per cent tariffs.

Alongside the tariffs, the Canadian government announced a USD 5.4 billion support package for businesses and workers affected by the trade dispute. The measures include liquidity support for small and medium-sized businesses, grants to speed up projects proposed by companies affected by US tariffs. Also, greater flexibility in employment insurance programmes for affected sectors is another focus.

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US aluminium exports to Canada fell 34.9 per cent y-o-y during January-May 2026. Despite the decline, the US remains Canada’s leading aluminium trading partner, with imports from the US still significantly higher than other sources. But the ongoing trade dispute could further affect this trade flow.

Meanwhile, President Claudia Sheinbaum of Mexico had dispatched her economy secretary, Marcelo Ebrard, to Washington for emergency talks after trade negotiations collapsed with Canada.