A 50% tariff on roughly $20 billion worth of Canadian goods took effect after last-ditch efforts to resolve the US-Canada trade dispute collapsed, raising concerns that the escalating trade war could push up prices for American consumers.
Canada is preparing to respond with “dollar-for-dollar” retaliatory tariffs from Sept. 8, Prime Minister Mark Carney said over the weekend, according to a report by CNN.
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American businesses now face several options: stop importing the affected goods until existing inventory runs out, absorb the tariff costs or switch to alternative suppliers.
However, Canadian suppliers may have been chosen because they offered cost or logistical advantages that are difficult to replicate. As a result, companies that shift their purchases elsewhere could still face higher costs.
Businesses are also dealing with rising energy and transportation costs linked to the war in Iran, leaving them with less room to absorb another financial hit. This increases the likelihood that at least some of the tariff costs could eventually be passed on to consumers.
If Ottawa proceeds with its retaliatory tariffs, the US-Canada trade conflict could deepen further.
For now, Americans could begin seeing higher prices for paper products, alcoholic beverages and dairy products.
Paper Products
The tariffs cover products ranging from parchment paper to paper cups and plates. Kraftliner, a strong paperboard primarily used in the outer layer of cardboard boxes, is also included.
Around three dozen types of plywood are among the hundreds of affected products.
According to US trade data cited by CNN, the broader product categories accounted for around $1.5 billion in US imports from Canada last year.
Alcoholic Beverages
Wine, beer and spirits, including whiskey, vodka and gin, are also affected by the new tariffs. The US imported about $1.5 billion worth of these products from Canada last year, according to the data.
Alcohol has remained a sticking point in trade negotiations between the two countries after several Canadian provinces removed American alcohol products from store shelves last year in response to US-imposed tariffs.
Those restrictions largely remain in place.
ALSO READ | US-Canada Trade Tensions Deepen As Ottawa Announces Fresh Tariffs
Dairy Products
A wide range of Canadian dairy products, including milk, cheese, butter and whey, has also been caught up in the tariff dispute.
The US imported around $780 million worth of dairy products from Canada last year.
Trump has accused Canada of unfairly restricting sales of American dairy products, alongside allegations of discrimination against US automobiles and alcohol.
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