The US‑Canada trade war in 5 charts

The US and Canada appear no closer to resolving their ongoing trade dispute. Tensions have simmered since the 2024 election, as the United States imposed a cascade of tariffs on Canadian steel, aluminium, lumber and automobiles.

In turn, Canada launched a counter‑tariff campaign, targeting a dollar‑for‑dollar retort on 28 bn Canadian dollars of US goods. This back‑and‑forth is shaping regional fortunes across both sides of the border.

Trade war hits Ontario hardest

Ontario, with its robust manufacturing base, bears the brunt of auto and steel tariffs. Several plants have announced layoffs and production cuts, costing the province tens of thousands of jobs since early 2025.

Meanwhile, Quebec’s metal exports fell 36% between February 2025 and 2026, accompanied by a 3.6% drop in employment in that industry.

Swing states in the cross‑hairs

In the U.S., the retaliatory tariffs hit key states unevenly. Ohio will see the largest hit—12% of its exports will be tariffed—followed by Illinois and Pennsylvania.

Economist Derek Holt notes that Canada’s moves target swing states that could influence the 2026 midterm elections.

Tariff rates: a global perspective

Canada’s average effective US tariff rate rose from 2.9% in June to 5.7% by September, surpassing the tariff burden on the UK and approaching that faced by Vietnam.

For comparison, the US tariffs on China remain the steepest, at an average of around 20.5%.

Canada’s exports are going elsewhere

The tariff war is nudging Canadian firms toward new markets. Data from the Bank of Canada shows a noticeable uptick in shipments abroad, while executives such as Matteo Sgaramella are targeting European venues.

The Canadian Chamber of Commerce highlights vulnerable regions—Oshawa, London and Kitchener‑Cambridge‑Waterloo—where diversification is slow.

Foreign direct investment hit a record C$96.8 bn in 2025, and Q2 2026 GDP grew 3.3% thanks to a surge in exports and investment.

Fewer jobs, less disposable income

Both sides face job losses and higher consumer costs. Bank of Canada data indicates 55 000 manufacturing jobs have vanished Canada‑wide, while the USA’s Center for American Progress cites similar losses from Trump tariffs.

Average household costs in the U.S. could rise by $840 this year owing to U.S. tariffs, while Canada’s tariffs are more targeted, aiming to shield consumers.

The current scenario could trigger further economic contractions if the current state of trade policy continues unmitigated.