Trump escalates Canada trade war with import bans, federal contract restrictions 

The restrictions came hours after Canada’s retaliatory tariffs took effect at 12:01 a.m. Tuesday.

Canada’s duties range from 15% to 50% and cover hundreds of U.S. products, including steel, aluminum, cheese, appliances, clothing, cosmetics and farm equipment. Steel and aluminum tariffs were doubled to 50%. Altogether, the measures affect about $20 billion in U.S. goods, equivalent to roughly 6% of American goods exports to Canada last year.

Canada has characterized the measures as a “dollar-for-dollar” response to U.S. tariffs. Washington’s tariffs cover about $28 billion worth of Canadian imports.

Related: New Canadian tariffs hit $20B in US goods, pressuring cross-border supply chains

Trump targets Canadian goods in federal contracts

President Donald Trump also broadened the dispute beyond cross-border imports Tuesday by directing the General Services Administration to begin removing Canadian-origin products from its Multiple Award Schedules, Reuters reported.

The schedules are used by federal agencies to purchase products and services through long-term government contracts.

Trump said the restrictions will remain unless Canada restores what he described as “full and fair reciprocity” for American farmers and companies.

The president said Canada’s federal and provincial governments are preventing U.S. businesses from competing in Canadian government procurement markets.

“I am hereby directing the GSA, working with the USTR, to take all necessary steps to REMOVE Canadian-origin products from GSA’s Multiple Award Schedules,” Trump said Tuesday.

The trade war escalation follows the collapse of U.S.-Canada negotiations on Aug. 21 and comes as both governments harden their positions.

Canadian Prime Minister Mark Carney said Tuesday that the trade fight could inflict economic pain but said his government would continue resisting U.S. demands.

“We will do whatever it takes for as long as it takes,” Carney said according to the Associated Press.

Carney has increasingly framed Canada’s response as an effort to reduce the country’s economic dependence on the U.S. More than 70% of Canadian exports currently go south of the border.

U.S. goods exports to Canada totaled $333.6 billion in 2025, while imports from Canada reached $381.9 billion, according to the U.S. Trade Representative.

As of Wednesday, freight volumes from Canada to the U.S. (OTVI.CAN) have dropped more than 16% over the last four days, according to SONAR, a freight market analytics and data platform. 

Why it matters: The escalating dispute is adding new costs and uncertainty to one of the world’s largest trading relationships and threatens deeply integrated cross-border freight and manufacturing supply chains.