Canada retaliates as US tariffs fall short of lost revenue

Each product's rate is set to match the U.S. tariff on the same goods. They cover C$27.6 billion (about US$20 billion) in imports, matching Washington's Section 338 tariffs dollar for dollar and drawing on goods also hit by U.S. Section 232 tariffs, according to Canada's Department of Finance. The duties took effect at 12:01 a.m.

Tuesday's move deepens a fight that has been building for months. The Section 338 tariffs the Trump administration began imposing this summer are part of an effort to rebuild tariff revenue after the U.S. Supreme Court struck down President Donald Trump's emergency-powers tariffs in February and a stopgap authority expired in July.

But they are not filling the hole: the Committee for a Responsible Federal Budget estimates the Section 301 and Section 338 tariffs together replace less than 60% of the revenue lost when the earlier tariffs were struck down.

No federal agency has published a dollar estimate of what the tariffs cost the U.S. importers who pay them or the consumers who bear higher prices, though the Congressional Budget Office estimates consumers ultimately bear most of the cost through higher prices.

The White House and the U.S. Trade Representative, asked by The Center Square whether the administration has produced such an estimate, have not provided one. The White House has said the cost of tariffs will "ultimately be borne by foreign exporters," a claim at odds with CBO's estimate that consumers absorb about 95%.

Independent analysts have measured the broader program the Canada duties belong to. The Tax Foundation, a nonpartisan tax-policy nonprofit, estimates Trump's tariffs will raise taxes by an average of $840 per U.S. household in 2026. The Yale Budget Lab, a nonpartisan policy research center, puts the figure at about $1,100.

President Donald Trump escalated the fight Sunday with a direct threat against Bombardier, the Canadian business-jet maker, posting on Truth Social: "NO MORE SELLING BOMBARDIER IN THE UNITED STATES! Their products aren't good enough!"

Trump told the company to "build here" to keep access to the U.S. market. Bombardier says it employs workers in more than 20 states and buys from about 2,800 U.S. suppliers, spending $2.5 billion a year.

Trump's Bombardier threat drew a response from Kansas' two Republican senators, whose state the senators say is home to more than 1,200 Bombardier workers.

Sen. Roger Marshall said Monday he had raised the company's case "inside the Oval Office," framing his appeal around bringing manufacturing jobs to Wichita rather than opposing the president. Sen. Jerry Moran said he had contacted the administration to stress Bombardier's importance to Kansas workers and its supply chain.

The administration says the tariffs answer years of Canadian trade barriers. A White House fact sheet said Canadian imports of U.S. motor vehicles fell 22%, or $5.6 billion, from April 2025 through March 2026, and that imports of U.S. alcoholic beverages fell 81%, or $582 million, from March 2025 through February 2026, after most Canadian provinces pulled U.S. products from store shelves. Canada, which has retaliated against Trump's tariffs since early 2025, calls the U.S. duties unjustified. U.S. Trade Representative Jamieson Greer has played down the cost, telling CNBC the duties cover "about 5%" of what Canada sends the United States.

Business groups on both sides of the border have warned against the escalating duties. Daniel Tisch, president of the Ontario Chamber of Commerce, called Tuesday "a sad day for North American businesses," saying the tariffs would raise costs and describing the tit-for-tat escalation as "mutually destructive." In the U.S., the Chamber of Commerce has warned that new tariffs would "drive up costs for U.S. families" and threaten the millions of jobs tied to North American trade.

The Section 338 tariffs may not survive. The Supreme Court struck down Trump's original tariffs in February, and a stopgap authority he turned to next was ruled unlawful before it expired in July. 

As of Tuesday, no one had sued over the Section 338 duties; the statute has never been used this way, and lawyers are still searching for an importer willing to be the test case, even as 25 states press a separate challenge to the Section 301 tariffs imposed this summer.