US-Canada Trade War Deepens As Tariffs Hit Jobs, Investment And Prices

According to the BBC, the US and Canada appear no closer to resolving their trade dispute after President Donald Trump expanded tariffs on Canadian goods and Ottawa responded with reciprocal measures. The US has targeted Canadian steel, aluminum, lumber and automobiles, while Canada has imposed counter-tariffs on C$28 billion of American goods. The report said Ontario has been hit hardest, with auto parts and assembly plants announcing layoffs and production cuts, while Quebec’s metal exports fell 36% between February 2025 and 2026 and employment in the sector dropped 3.6%. The Royal Bank of Canada said Ontario and Quebec are the most exposed provinces, and additional US tariffs on about $20 billion of Canadian goods that took effect on 22 August are expected to weigh on British Columbia, Quebec and Ontario. On the US side, Canada’s retaliation is aimed at swing states, with Ohio the hardest hit at C$3.2 billion, or 12%, of exports soon to be tariffed, followed by Illinois and Pennsylvania. Derek Holt, an economist at Scotiabank, said the counter-tariffs appear deliberately targeted at states that could influence the balance of power in the upcoming midterm elections. The average effective US tariff rate on Canada has risen to 5.7% from 2.9% in June, according to Royal Bank of Canada data, while the US rate on the UK is 6.2% and China still faces about 20.5%. The BBC said Canadian firms are exporting more to countries outside the US since Trump returned to the White House in January 2025, and foreign direct investment into Canada reached C$96.8 billion in 2025, the highest inflow since 2007. Canada’s GDP grew 3.3% in the second quarter of 2026, helped by stronger exports and domestic investment. The report also said around 55,000 manufacturing jobs were lost in Canada from January 2025 to January 2026, while Calgary-based economist Trevor Tombe estimated that 90,000 jobs across the country could be lost if the latest US tariffs persist. The Tax Foundation estimated that an American household could pay $840 more on average this year because of Trump’s tariffs.