How US tariffs on Canada could impact you — and what you can do
Note: On July 20, 2026, US President Donald Trump announced new 50% tariffs on Canadian goods that will go into effect on August 19. The tariffs will override CUSMA exemptions and apply to all covered goods. Previously, on April 2, 2025, US President Donald Trump announced a 25% global tariff on cars and trucks starting April 3, as well as tariffs on auto parts starting May 3. He also announced sweeping tariffs on 180 countries and territories (excluding Canada). On April 3, Canada announced 25% counter-tariffs on US vehicle imports. We will update this article as new information becomes available.
This article was originally published on April 3, 2025 and was updated on July 24, 2026.
United States President Donald Trump’s second term in office has led to fraught US-Canada relations. On February 1, 2025, Trump ordered 25% tariffs on Canadian imports to the US, upending both nations’ long and tight-knit trade relationship. In response, the Canadian government announced retaliatory 25% tariffs on American imports.
In early March, after an initial 30-day pause and more about-turns, the tariffs came into effect: 25% on imports from Canada and Mexico that did not fall under the Canada-U.S.-Mexico Agreement (CUSMA, also known as USMCA), 25% on steel and aluminum, and 10% on Canadian energy and potash.
On July 20, 2026, President Trump announced additional 50% tariffs on a sweeping list of Canadian goods. According to the U.S., these tariffs are in response to “Canada’s discriminatory treatment of American products” and are set to take effect on August 19. The tariffs, which fall under Section 338, will apply to all covered goods, even those under CUSMA, but will not apply to energy, potash, or other products already subject to tariffs under Section 232.
The Trump administration continues to fuel the trade war with Canada by threatening new tariffs. For example, on July 21, it was announced that any generic drugs imported to the US will face a 100% tariff starting in August 2028, which will increase to 200% the following year.
So, what does this trade war mean for the Canadian economy? More importantly, what can Canadians do for their financial security? Let’s dive in.
Key takeaways
- As of July 2026, US tariffs on Canada are: 50% on goods including wine, hockey sticks and cement (effective August 19); 10% on non-CUSMA imports, 10-50% on steel, aluminum, and copper under Section 232; 10% on non-CUSMA compliant energy and potash; and 25% on non-CUSMA compliant automobiles and parts.
- Canada’s countermeasures have been mostly removed as of September 1, 2025, but the 25% tariffs on steel, aluminum and vehicles remain.
- Since March 2025, the ongoing trade war has driven up the prices of tariff-affected products in Canada and contributed to the country slipping into a technical recession in early 2026 (although growth has resumed).
- To protect yourself financially, consider building up your emergency fund, allocating more to low-risk investments like GICs, reviewing your auto insurance policy, and locking in a rate hold if you’re shopping for a mortgage or coming up for renewal.
How do tariffs work?
A tariff is essentially a tax that a country levies on imports or exports of goods with foreign countries. For instance, Canada’s biggest exports to the US include fuels, vehicle parts and machinery.
When a tariff is imposed on imports from Canada, US importers have to pay those tariffs, making the goods more expensive. This cost is passed on to US consumers, but Canadian consumers are also impacted if products made with Canadian materials and parts are then exported back to Canada.
As a result, US importers will try to negotiate with Canadian exporters for a lower price, or switch to importing goods from another country with lower prices and/or tariffs. Either way, Canadian businesses will take a hit.
How is the Canadian government fighting back?
To fight back, the Canadian government implemented counter tariffs on US goods in March 2025, although most of these tariffs were removed as of September 1, 2025. Canada's 25% tariffs on steel, aluminum, and automobiles remain in place.
Prime Minister Mark Carney has not yet announced any new countermeasures in response to the 50% tariffs, although he has publicly stated both he and Trump agreed to intensify trade negotiations. Ontario Premier Doug Ford released a social media post urging Canada to hit back at the US “tariff for tariff.” The premier has also said he will not lift the ban on US booze in the province. As it stands, only Alberta and Saskatchewan have lifted their bans on US alcohol, while other provinces continue to hold firm.
Over the past year, the trade war has taken a toll on the Canadian economy. In early 2026, Canada fell into a technical recession. However, GDP is estimated to have grown at an annualized rate of 2.5% in the second quarter. As of June, the unemployment rate was at an elevated 6.5%, and most recently, on July 15, the Bank of Canada held its rate at 2.25% for the sixth consecutive time. Inflation and uncertainty around US trade policy were listed as reasons to hold off on cuts. If Canada retaliates against the new tariffs, there may be additional economic repercussions.
How can you strengthen your financial situation?
Amid any political and economic uncertainty, the only thing you can be sure of is your personal finances. Here are a few things you can do to prepare yourself financially should your job be affected:
Build up your emergency savings
It’s always prudent to save for a rainy day, so you’ll want to make sure you can survive six to 12 months of unemployment and price hikes. Review your budget, see if you can spend less and save more in your emergency fund, and put it all in a high-interest savings account where you can readily access your funds if needed.
If you’re currently in debt, make paying it off your top priority.
Review your auto insurance policies
With the automotive sector already dealing with 25% auto tariffs, now is not a bad time to shop for a cheaper auto insurance rate before any further increases to pricing come into effect. The impact of the tariffs may not be fully felt this year, but it surely will in the years to come, as the industry plays catch-up on recouping against added expenses.
Review your auto insurance policies to make sure you’re getting the most comprehensive coverage at the lowest rate tailored to your needs.
Balance market volatility with low-risk investments
Even though the stock market rallied in the aftermath of the US presidential election, Trump’s tariffs (and overall unpredictable moves) bring significant volatility to the market. If your risk appetite is low, GICs offer modest returns compared to stocks, funds, and crypto — but they’re also the best option for stress-free investing.
Consider purchasing GICs through a tax-sheltered account like your TFSA or RRSP to get the most out of your investment and ensure the rates can help you combat inflation. Alternatively, you could also invest in funds that are based on high-interest savings or bonds.
If you already have long-term investments, there’s no harm in keeping them as long as your portfolio remains at the same risk level or becomes lower-risk.
Lock in a rate if your mortgage is due for renewal
If your mortgage is up for renewal this year, consider starting the process sooner rather than later. Most lenders will allow you to begin your mortgage renewal 120 days prior to your actual term end, which gives you the chance to take out a rate hold. Doing so will guarantee you access to the lowest rate available to you today for up to 120 days, even if fixed interest rates rise or lenders narrow the spreads to prime on their variable mortgage rates.
Remember, variable rate mortgages are tied to the overnight rate, which means they could fall if the Bank of Canada decides to cut its rates in the future. In general, a variable mortgage rate provides less stability to your finances than a fixed rate, which is tied to the bond market. If you’re looking to rid yourself of anxiety over fluctuating rates, now is a good time to secure a 3-year or 5-year fixed rate.
The bottom line
Canada continues to battle uncertainty in 2026 as new tariffs are imposed and inflation pressures persist. While the economy is recovering from the technical recession earlier this year, it is best to approach your personal finances with caution.
In this uncertain time, make it your priority to stay afloat financially. When things clear up in the future, you'll be in a better position to build your wealth.