Washington: US-Canada relations will deteriorate further after the United States on Tuesday imposed a decision to ban nearly $1 billion worth of Canadian imports, including alcoholic beverages, dairy products and motorcycles.
The ban amounts to barely a ripple in $880 billion worth of annual two-way trade between the two northern neighbours. But it marks another ratcheting up of President Donald Trump's second-term trade war with America's longtime ally and trading partner.
The import ban “certainly won't do anything to help the trade tensions between the United States and Canada,'' said trade attorney Patrick Childress, a partner at Holland & Knight and a former US trade official.
The latest sparring began over the summer when Trump reached back to a Great Depression law to impose 50 per cent tariffs on about $20 billion worth of Canadian imports, charging that Canada discriminates against US dairy, auto and alcoholic beverage producers. Canada promptly counterpunched with tariffs of 15 per cent, 25 per cent or 50 per cent, matching US imports dollar for dollar.
To punish Canada for retaliating against his tariffs, Trump decided to ban a list of Canadian products, effective 12:01 a.m. Eastern time Tuesday.
Limited Economic Impact
The economic impact is likely to be minimal. Childress noted that the products on the banned list were already facing Trump's tariffs. ”For a lot of these goods, the 50 per cent was already acting as a de facto ban by making importation from Canada into the United States uneconomical,? he said.
Jacob Jensen, director of trade policy at the centre-right American Action Forum think tank, calculates that the ban would cover $967 million worth of Canadian imports, based on 2025 numbers. Of that, 87 per cent would be alcoholic beverages that the US targeted because some Canadian provinces responded to Trump's provocations by banning US booze from store shelves.
Also banned are some dairy products — including the milk byproduct whey. The two countries have long clashed over Canada's attempts to protect its dairy industry from foreign competition by imposing hefty tariffs once dairy imports have exceeded a quota.
The ban also covers motorcycles. Bombardier Recreational Products (BRP) in Quebec confirmed that its three-wheel Can-Am Spyder and Canyon motorcycles ‘will be excluded from importation into the US ', but BRP said the impact likely won't be felt until next year because it has completed most production and shipments for the current season.
Independent spirit distillers and beer brewers are expected to bear the brunt of the ban more than some well-known Canadian brands that may have workarounds. For example, Crown Royal can ship its whisky in bulk for processing, bypassing the ban. And beer maker Labatt Brewing Co. has some bottling operations in the US, exempting some of its beer from the ban.
Diageo, which owns Crown Royal, and Anheuser-Busch InBev, which owns Labatt, did not respond to requests for comments.
A distillery just across the Detroit River in Canada has stopped shipping whiskey to Michigan due to the ongoing tariff war and Trump's ban on Canadian alcohol. “It's really unfortunate,” said Danielle Moldovan, director of marketing at the Wolfhead Distillery in Amherstburg, Ontario. “We are a border town. The Americans are great friends of ours, and they visit our distillery on a daily basis.”
Moldovan is worried about the long-term impact on Wolfhead's business. Buyers in Georgia were interested in importing the distillery's Coffee Whisky. And its Michigan importer was considering its Vanilla Almond Biscotti and Banana Caramel Vodka. But “those products are going to be put on hold right now until we have further clarification about what's going to happen, how long this ban's going to last,” Moldovan said.
“This marks yet another escalation in the trade war that may result in further retaliation on the Canadian side,” Jensen said. He expects Canadian exporters and U.S. importers “impacted by these bans will be highly motivated'' to demand that trade officials on both sides find some way to reach a “resolution of this whole ordeal.''
The impasse imperils efforts to renew the US-Mexico-Canada Agreement, a North American trade pact Trump pressured America's neighbours into accepting in his first term and which he once declared ‘the most modern, up-to-date, and balanced trade agreement in the history of our country.’
The deal allowed most goods to cross North American borders duty-free. But since returning to the White House last year, Trump has announced a series of tariffs that have clouded the future of trade in the region.
Canada to seek new trading partners
Trump has directed most of his ire at Canada. He is openly seeking to pull Canadian manufacturing south. And he has inflamed public opinion in Canada by repeatedly suggesting that the country become America's 51st state.
Canadian Prime Minister Mark Carney came to power last year on a promise to stand up to Trump. In addition to retaliating against Trump's tariffs, China is the only other country to do so, with very different results. Carney has sought to reduce Canada's reliance on the United States, which accounted for more than 70 per cent of Canadian exports last year.
“There is now a price to be paid for access to the United States market,” Carney said earlier this month. The Canadian prime minister wants to double Canada's non-US trade over the next decade.
Carney has embraced the prospect of Canada becoming the European Union's first associate member.
And he said last week that trade negotiations with India are making ‘good progress' and that the two countries are aiming to conclude talks by the G20 summit in mid-December.
Carney also broke with the US earlier this year, striking a deal with China to allow a limited number of Chinese electric vehicles into Canada at a sharply reduced tariff in exchange for China lowering tariffs on Canadian canola.
“We take note of the coming into force of the Administration's previously announced trade measures," said Gabriel Brunet, a spokesperson for Canada-US Trade Minister Dominic LeBlanc. "Our first priority remains on protecting and supporting Canadian workers, farmers, families, and businesses from these unjustified actions. Our core focus is on what we can control: building strength at home, diversifying our partnerships abroad, and building Canada strong for all Canadians.”
Trump expressed confidence that the Canadians would cave in.
“They're gonna come in, and they're gonna say, Sir, we are sorry,'” he told reporters Monday. “They've treated the United States very, very badly. I think a deal will be made, but it's gonna be fair.”
Asked Tuesday about Trump's remarks, Carney declined to respond directly but said Canada remains open to talks.
“Canada stands ready to negotiate in good faith” toward “a mutually advantageous trade arrangement that respects both our countries' sovereignty,” Carney said.
Carney also left the door open to further Canadian retaliation over US tariffs and import bans, saying he would “never rule anything out.” Asked whether Ottawa might increase trade pressure as the US midterm elections approach, Carney said Canada would not time its response around the American political calendar.
He said Canada could help lower US living costs and argued that energy, food, information and financial security are best served through reliable partnerships.
“Canada is a reliable partner, and we're ready to work in any or all of those areas,” Carney said.
Trade attorney Childress said the standoff is likely to continue for months, not weeks. The import bans and the tariffs so far “probably won't cause enough economic upheaval to force either party back to the negotiating table,'' he said.
