Canadians and Americans can expect higher prices and tighter supply lines after Canadian Prime Minister Mark Carney introduced retaliatory import taxes on a range of US goods this week. The measures follow an escalation in a wider tariff conflict with the US that began after President Donald Trump restarted a tariffs policy on his return to the White House.
The new duties include matching US metal levies at 50% and fresh charges on wood products such as plywood and even screws used in timber construction. Canada has also targeted a list of household goods, including carpets, washing machines, furniture, fridges and cutlery. Provinces that previously blocked US alcohol sales last year may reimpose restrictions, and Saskatchewan has announced a 50% charge on US imported alcohol set to start on 8 September when the wider Canadian tariffs take effect.
The most immediate knock-on is for housing and autos. Building firms that import steel, aluminium and lumber face higher input costs that may be passed to buyers, increasing the cost of homes. The US imported $23bn (C$32bn, £17bn) of wood products in 2024, almost half from Canada, a scale that underlines how lumber duties reverberate through construction markets.
Autos are also at risk. A 25% US tariff on certain Canadian vehicles has been in place since last year. President Trump has threatened to raise tariffs on Canadian vehicles from 25% to 50% from 1 January 2027, a move that would further burden manufacturers and buyers. Bernard Yaros, lead economist at Oxford Economics, says dealers have absorbed the "lion's share" of previous cost rises but that cushion is running out. He warns a 50% levy would feed through to consumer prices more readily and could prompt manufacturers to prioritise luxury cars, SUVs and pick-up trucks while tightening supplies of lower-cost new vehicles.
Analysts say Canada chose many targets that consumers can replace with domestic alternatives, limiting household pain. Bradley Saunders, North America economist at Capital Economics, says the list of goods appears intentionally fungible so Canadians can shift to local suppliers, blunting direct price shocks. Still, US consumers are likely to see marginal rises in furnishings and other household equipment from higher lumber and material costs, according to the Budget Lab at Yale.
The conflict remains unresolved. Ottawa has not matched the 50% auto threat, but the possibility that Washington will raise car tariffs on 1 January 2027 keeps a major sector at risk and leaves both supply chains and prices liable to further volatility.
