Canada to Target Steel with Retaliatory Tariffs as U.S.-Canada Trade Talks Collapse

According to industry reports, U.S.-Canada trade negotiations have broken down, with Washington imposing additional 50% tariffs on a range of Canadian products and Ottawa preparing retaliatory measures that will target steel, among other sectors. Canadian Prime Minister Mark Carney said the counter-tariffs will take effect on Sept. 8, adding another layer of uncertainty to North American metals trade and industrial supply chains.

The new U.S. tariffs took effect last Saturday after negotiators failed to reach an agreement following a week of talks. The measures affect roughly $20 billion in Canadian exports, according to the information provided, with products including cement, dairy goods, clothing, furniture, wine, fishing equipment and hockey equipment among those affected.

The talks appeared close to a deal earlier last week. U.S. Trade Representative Jamieson Greer said Canada declined to finalize an agreement under terms discussed during the negotiations, while Carney said last-minute changes proposed by Washington were unacceptable and did not meet Canada's objectives.

For the Canadian steel industry, the dispute introduces another potential trade barrier with its largest trading partner. Carney said Canada’s retaliatory tariffs will cover sectors including steel, dairy, agricultural equipment, and pulp and paper, with further details expected in the coming days. He previously indicated that the measures would be imposed on a “dollar-for-dollar” basis.

Carney said Canada had been prepared to remove some of its existing retaliatory tariffs on U.S. steel, aluminum and automobiles if Washington reduced its own measures. That proposal did not result in an agreement.

Steel and aluminum have already been central to the broader U.S.-Canada trade dispute. New Canadian measures targeting steel could affect cross-border flows of primary and processed steel products, while adding pressure to procurement costs and supply-chain planning for manufacturers and downstream users. 

The potential impact extends beyond steel producers. Canada and the United States maintain deeply integrated industrial supply chains, with raw materials, intermediate products and manufactured goods frequently crossing the border during production. New tariffs and counter-tariffs could therefore influence sourcing decisions and landed costs for companies operating on both sides of the border.

Business Roundtable CEO Joshua Bolten warned that additional tariffs and retaliation could raise costs for U.S. businesses and consumers, disrupt supply chains and put further strain on the economic relationship between the two countries.

Carney also pointed to the importance of the bilateral energy relationship, arguing that Canada’s while working to diversify export energy exports support U.S. economic activity. He said Canada would continue to assess its options markets and strengthen domestic economic capacity.

The latest breakdown adds to uncertainty surrounding the future of the broader U.S.-Canada-Mexico trade framework. The three countries had already been navigating separate discussions over their trilateral trade agreement, while the U.S. and Canada continue to face disagreements over tariffs and trade balances.

Further details of Canada's retaliatory tariff package, including the specific steel products covered and applicable rates, are expected to be announced before the Sept. 8 implementation date.

Source: CNBC

SUNSHINE Spotlight: Canada’s planned Sept. 8 retaliation puts steel among the key sectors facing new trade barriers, adding another variable to North American steel flows, costs and cross-border supply chains.