Carney matches Trump tariffs with 50% tax on US dairy, steel

Prime Minister Mark Carney matched the new tariffs imposed by President Donald Trump and announced new support programs for Canadian businesses hurt by the escalating trade war with the country's largest trading partner.

Canada will double its existing counter-tariffs on U.S. steel and aluminum products to 50%. American-made milk, furniture, clothing and apparel will also have new 50% duties applied, as will video-game consoles, smartphones and other electronics. 

Overall, the retaliatory levies will affect $20 billion worth of annual U.S. exports to Canada, roughly matching the dollar-value impact of the tariffs the White House put on Canadian products on Saturday. It's equal to about 6% of U.S exports to Canada last year. 

The counter-tariffs, which are set to take effect on Sept. 8, mark a sharp reversal in Carney's approach. 

His predecessor, Justin Trudeau, implemented counter-tariffs on a long list of U.S. items as soon as Trump launched his trade war. But Carney lifted many of them in an effort to improve relations and get to the negotiating table, and made numerous other concessions — particularly on digital policies — in an attempt to get a deal done.

But trade talks between the two sides collapsed on Friday, and the prime minister said Monday that it had become clear to him that U.S. officials were trying to destroy key Canadian industries such as steel, aluminum and auto manufacturing.

"Ultimately, the terms proposed by the U.S. administration were uneconomic, unfair, and ultimately unacceptable. They asked too much of Canada and offered too little in return," Finance Minister Francois-Philippe Champagne said at a news conference on Tuesday. 

The Canadian dollar, which had advanced earlier, reversed some of those gains to trade little changed at C$1.3838 per U.S. dollar as of 12:21 p.m. in New York.

Other U.S. products such as appliances, cheese, fish, seafood and certain steel and aluminum derivative products will have 25% tariffs applied at the Canadian border. A range of U.S.-made machinery, industrial tools and farm equipment will have a 15% tax.

The White House didn't immediately respond to a request for comment.

Trump, however, has unleashed a torrent of social media commentary about Canada — largely focusing on the steel and auto heartland of Ontario and its premier, Doug Ford, who has been a strident proponent of retaliation against the U.S. 

In one post on Tuesday morning, Trump said he was giving "serious consideration" to changing the name of Lake Ontario to Lake America, given "we don't expect to be doing much business with Ontario any longer." He later posted a map with the lake's name crossed out and an American flag above the city of Toronto.

Economic hit

The chief executive officers of Bank of Montreal and Bank of Nova Scotia, speaking on earnings calls Tuesday, both said the latest round of U.S. tariffs on imports from Canada appears manageable for the country's economy and the banks' clients. Government financial support for affected sectors should help mitigate the effects, they said, and both called on Ottawa and the provinces to use the moment to speed up regulatory approvals and slash red tape.

Canadian government officials providing a background briefing to reporters said the goal of the new measures is not to raise revenue for Canada, but to support the market share of Canadian firms that will lose sales to the U.S. 

Canada's new counter-tariffs would hit hardest firms shipping products from Ohio, Illinois, Pennsylvania, Michigan and California, according to a preliminary analysis of the data by Bloomberg News. 

The Carney government also unveiled a C$7.5 billion ($5.4 billion) package of support measures for Canadian businesses, including a boost in funding for some existing programs that were created last year.

Those new measures include liquidity support for small- and medium-sized businesses, grants to speed up projects proposed by businesses hit by US tariffs, and an extension and greater flexibility for employment insurance programs in affected sectors. 

The Business Development Bank of Canada will offer C$500 million in loans to support smaller firms whose cash flows are hit by tariffs. No capital repayment will be required for 36 months — "so after the Trump administration," Industry Minister Melanie Joly said.

Joly and other cabinet members urged consumers to buy Canadian-made products. Many of the country's residents have already embraced a boycott of U.S. products and travel, in response not only to Trump's tariffs but his repeated comments that Canada should be the 51st U.S. state.

"What is really important from this new chapter of the trade war is that actually, when you choose a Canadian product, you're not only putting pressure on the U.S. right now, you're protecting jobs," Joly said. 

"The new companies that are affected by the tariffs are actually those that you may see at the grocery store or at your local Canadian Tire," she said, naming a Toronto-based big-box retailer.