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Canada and the United States Enter Trade Skirmish as New Tariffs Impact $40 Billion in Goods

The administration announced the implementation of Section 338 tariffs, which impose a 50% levy on approximately $20 billion worth of Canadian goods. In response, Canada announced a "dollar-for-dollar" retaliation, applying varying tariffs on roughly $20 billion of American exports to Canada. These measures affect a significant portion of the annual trade between the two nations, which totals approximately $900 billion. While the administration's tariffs apply regardless of USMCA qualification, Canada's response is designed to be strategic and targeted. The trade dispute has already begun to impact manufacturing sectors in Ontario and Quebec. In Canada, 55,000 manufacturing jobs were lost between January 2025 and January 2026. In the United States, the non-partisan Center for American Progress estimates that the "Liberation Day" tariffs have led to the tens of thousands of jobs lost in manufacturing, transportation, and warehousing sectors. Economic analysts note that if a deal is not reached by January, the situation could escalate into a full-fledged trade war, with 50% tariffs hitting major Canadian exports like cars, trucks, and auto parts.

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