Listeners, Canada and the United States are facing their most turbulent tariff environment in recent history as President Donald Trump’s second term has brought sweeping new duties and trade barriers, dramatically reshaping economic relations between the two countries. According to Wikipedia and the Wall Street Journal, the average applied U.S. tariff rate jumped from 2.5% at the start of 2025 to nearly 27% by April, with a later adjustment settling the rate at about 17.9% as of September. U.S. tariff revenue from these measures now exceeds $30 billion per month, tripling compared to 2024.
The most headline-grabbing change for Canada involves automotive and metal tariffs. In early 2025, Trump imposed a 25% tariff on imported cars and auto parts, which hit Canadian manufacturers hard. Factories across Ontario and Quebec—Canada’s manufacturing heartland—have suffered immense strain, with unemployment now at a decade high of 7.9% in Ontario and over 11% in Windsor, the epicenter of Canadian auto production, according to the Wall Street Journal. Stellantis, one of the largest U.S. automakers, was forced to close Canadian factories and lay off hundreds of American workers in response.
Canada has not stood idle. Ottawa retaliated in March with a matching 25% tariff on $20 billion USD worth of American goods, expanding the list throughout the spring and summer. Canadian tariffs now impact major U.S. exports including vehicles, steel, aluminum, and agricultural products. Provinces and industry associations have rallied behind “Buy Canadian” marketing campaigns, dramatically boosting sales of Canadian-made whiskey, wine, and groceries in response to provincial bans on many U.S. imports. American whiskey exports to Canada have dropped by over $100 million, and premium Californian wineries saw exports nearly disappear, with losses approaching $200 million for 2025.
Listeners should note: the blanket 35% U.S. tariff rate announced by Trump applies only to Canadian goods not covered by the U.S.-Mexico-Canada Agreement, or CUSMA. Goods qualifying under CUSMA are mostly exempt, but the current rules have created intense uncertainty. Non-compliant Canadian goods now face the full weight of tariffs, while energy imports and potash from Canada are currently subject to a separate 10% rate under Trump’s fentanyl-related executive order. For Canadian steel and aluminum, it’s a brutal 50% tariff. The Canadian Chamber of Commerce estimates that a permanent 25% tariff could shrink Canada’s GDP by nearly 2.6% and cost the average household roughly $1,900 a year, while Oxford Economics predicts more than 150,000 jobs lost.
Tensions have only heightened since October, when Trump abruptly ended trade negotiations with Canada following an Ontario ad criticizing U.S. tariffs using Ronald Reagan-era clips. Soon after, Trump promised an additional 10% tariff hike on Canadian goods, though details on its implementation remain unclear.
Amid this trade war, Canadian Prime Minister Mark Carney’s recent victory was attributed in part to rising anti-Trump sentiment and calls for stronger Canadian economic sovereignty. As both countries dig in, Canadian officials and economists warn there are no quick fixes. The current round of tariffs is broader than at any time in decades and impacts every sector from cars and metals to grocery store staples.
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