US-Canada tariff escalation puts aluminium, CO2 and industrial supply chains under pressure

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The latest escalation in the US-Canada trade dispute is set to affect several industrial supply chains, including aluminium, CO2, cement, building materials and electronics. The US imposed 50 per cent tariffs on roughly USD 20 billion of Canadian goods on August 22, while Canada plans to retaliate with matching dollar-for-dollar tariffs from September 8.

The move marks a dramatic reversal from the de-escalation a year ago, when Canada removed the majority of its retaliatory tariffs in September 2025.

Aluminium is among the materials directly caught up in the dispute. US tariffs of up to 50 per cent on aluminium and steel are expected to raise packaging costs for the production of soda, sparkling water and other CO2-infused drinks, which relies on imported CO2 cylinders, aluminium cans and machinery.

The wider food and beverage sector and CO2 value chain are also looking vulnerable, while cement, building materials and electronics could have resonance with the industrial gases sector.

Industrial gases and CO2 face further pressure

Non-US Mexico Canada (USMCA)-compliant industrial gases face a 35 per cent tariff, up from an initial 25 per cent. The measure applies to upstream production, including air separation gases, midstream equipment and downstream sectors such as packaged gases, cylinders, and electronic and healthcare applications. USMCA-compliant goods remain exempt.

CO2 could also be affected indirectly if associated compressed gases are imported from tariffed countries, increasing procurement costs. Companies transporting, liquefying or using CO2 may also face effects from slower port operations, higher freight costs or the need to find alternative suppliers.

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The pressure comes as US brewers are already facing challenges in sourcing CO2 and losing revenues, as discussed during last week’s gasworld CO2 webinar.

Prime Minister Mark Carney said the “US asked too much and offered too little” as Canada confirmed its retaliation would cover steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

Total US-Canada trade reached USD 879.9 billlion in 2025, according to Global Statistics. The US goods trade deficit with Canada narrowed to USD 48.3 billion, a 21% improvement on 2024.

Trump raises the stakes

The dispute has become more confrontational, with US President Donald Trump threatening to raise tariffs on Canadian cars, trucks, auto parts and steel to 50 per cent from January 1, 2027.

Trump has also said products manufactured in the US would face zero tariffs.

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