Canada Suspends US Trade Talks, Imposes Counter-Tariffs and $7.5B Support Package
In August 2026, Canada suspended trade negotiations with the United States following a 50% U.S. tariff on Canadian goods. Ottawa responded with dollar-for-dollar counter-tariffs effective September 8 and introduced a $7.5 billion support package for affected workers and businesses.
The Government of Canada has suspended trade negotiations with the United States after Washington imposed a 50% tariff on $27.6 billion worth of Canadian goods, effective August 22, 2026. Officials stated that the suspension was necessary because the proposed terms were not in Canada's best interest.
In response to the U.S. measures, Canada announced targeted counter-tariffs on specific American imports, which will take effect on September 8, 2026. These counter-measures are designed to be dollar-for-dollar against the $27.6 billion in U.S. goods impacted by the new tariffs. The rates applied will be 15%, 25%, and 50%, targeting sectors most affected by the U.S. actions, including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.
Specifically, goods subject to the 50% counter-tariff include steel and aluminum products (previously taxed at 25%), furniture, clothing, apparel, milk powder, whey, honey, molasses, perfumes, cosmetics, plastics, wood charcoal, plywood, paper products, carpets, and synthetic fiber clothing. Items facing a 25% rate include appliances, cheese and other dairy products, certain steel and aluminum derivatives, sawn coniferous wood, kraft paper, toilet paper, handkerchiefs, and various textile floor coverings.
Simultaneously, the federal government introduced a $7.5 billion support package to assist workers and businesses facing financial pressure. This new funding builds upon nearly $25 billion in previous supports already provided. Key components of the package include:
- $3.5 billion allocated to Rapid Response Supports for Workers and Employers, featuring extended Employment Insurance (EI) flexibilities and a new Worker Retention and Retraining Program.
- $2 billion invested through the new Canada Strong Diversification Fund to support shovel-ready projects.
- $1.5 billion added to the Regional Tariff Response Initiative, delivered by Regional Development Agencies.
- A new $500 million liquidity stream under the Business Development Bank of Canada’s (BDC) Pivot to Grow program.
Additional measures include expanding eligibility for BDC tariff-related programs by lowering the minimum revenue requirement for applicants to $1 million. Furthermore, new flexibilities were provided to the Large Enterprise Tariff Loan facility administered by the Canada Enterprise Emergency Funding Corporation (CEEFC), increasing maximum loan terms from 10 to 15 years.
Government officials have engaged with stakeholders to coordinate this response. On August 24, Minister of Finance François-Philippe Champagne met virtually with provincial and territorial finance ministers to discuss the strategy. Deputy Minister Nick Leswick hosted a briefing with industry and labour stakeholders on August 25 regarding the suspension of negotiations and the counter-tariffs. On August 27, Secretary of State Wayne Long visited Forbes Dairy Farm in Sarnia, Ontario, to highlight the support measures available to affected businesses.