50% US tariffs on selected Canadian goods are pushing Ottawa to seek new markets and strengthen domestic trade

The new US tariffs on certain Canadian goods have added fresh pressure to bilateral trade, prompting Ottawa to accelerate efforts to diversify its economy and reduce dependence on the United States.

The 50% tariffs took effect Saturday after negotiations between the two countries failed to reach an agreement. They affect about $20 billion worth of Canadian goods, representing around 5.5% of Canada’s exports to the United States, including products such as hockey sticks and cement.

About 70% of Canadian exports are sent to the United States, leaving the Canadian economy highly exposed to changes in US trade policy.

Prime Minister Mark Carney has responded by pursuing new international markets, encouraging domestic trade and advancing major infrastructure projects. Canada has also faced economic difficulties this year, including two consecutive quarters of contraction.

Carney said Canada would match the US tariffs “dollar for dollar” to protect Canadian workers and businesses.

The latest measures also affect some products previously covered by protections under the United States-Mexico-Canada Agreement (USMCA), raising concerns about the future of the North American trade framework.

Richard Ouellet, a professor of international economic law at Quebec’s Laval University, described the move as a breach of the protection previously provided by the agreement.

However, Royal Bank of Canada said the tariffs were unlikely to significantly alter overall Canadian growth because they affect a relatively small share of total trade. The bank estimated that around 80% of Canadian goods would continue to enter the United States tariff-free.