It's been a wild ride. Honestly, if you told a supply chain manager in 2024 that we’d be starting 2026 with a "Buy Canadian" policy and a partial trade ceasefire, they probably would’ve just quit on the spot. But here we are. The dust from the 2025 trade eruption is finally settling, though "settled" is a pretty generous word for a situation that still feels like a standoff.
Basically, the Canada tariffs on United States are no longer just a threat—they are a lived reality for businesses from Windsor to Waco. While the headlines last year were all about "trade wars" and "economic doomsday," the actual situation on the ground today is way more nuanced. It's a mix of strategic retreats, stubborn holdouts on steel, and a very awkward new relationship with China that has the U.S. Trade Representative, Jamieson Greer, looking at Ottawa with a raised eyebrow.
Why the Canada Tariffs on United States Aren't Gone Yet
You've likely heard that things "normalized" back in September. That’s only half true. Prime Minister Mark Carney did pull back on a huge chunk of retaliatory tariffs—about $44 billion worth—to play nice after the U.S. exempted most CUSMA-compliant goods from that massive 25% across-the-board threat.
But don't let the "removal" fool you into thinking it's business as usual.
Canada kept its teeth. Specifically, the 25% tariffs on U.S. steel, aluminum, and automobiles are still very much alive. Why? Because the U.S. refuses to budge on its own metal duties, citing national security. It’s a classic "you blink first" scenario. As of January 2026, if you’re importing a U.S.-made Ford that doesn’t meet specific CUSMA content rules, or you're a builder in Toronto eyeing American-made I-beams, you’re still paying that 25% premium. It's steep.
The Items You’re No Longer Paying Extra For
Thankfully, the "grocery store tax" portion of the retaliation ended last fall. For a few months there, it was getting ridiculous. We saw 25% surtaxes on:
- Orange juice and coffee (The breakfast of champions got expensive fast).
- Whiskey and beer (A tough blow for the hospitality sector).
- Household appliances (If your dishwasher broke in May 2025, I’m sorry for your wallet).
Those specific consumer goods are now tariff-free again. But the scars remain. Many Canadian retailers shifted their sourcing to Europe or South America during the peak of the spat, and honestly, some of them aren't coming back to U.S. suppliers. They realized that having a single-point-of-failure supply chain across the border was a massive risk.
The "Steel-Derivative" Pivot of 2026
Just when we thought the tariff talk was cooling down, December 26, 2025, happened. This is where it gets technical but super important for the construction and energy sectors. Canada implemented a new 25% tariff on "steel-derivative" products.
We’re talking about:
- Wind towers and bridge sections.
- Industrial cables and screws.
- Kitchen cabinets and vanities (The U.S. actually hit these first, and Canada replied).
This wasn't just a random jab. It was a calculated move to prevent "transshipment." The U.S. was worried that Chinese steel was being slightly modified in Canada and then slipped across the border. Canada, trying to prove it's a "reliable partner," basically mirrored the U.S. restrictions.
It's a weird kind of protectionism. We're taxing stuff to prove we’re on the same team as the person we’re arguing with.
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The China Factor: A Massive Monkey Wrench
Here is the part nobody talks about enough. On January 16, 2026, Prime Minister Carney dropped a bombshell in Beijing. Canada is cutting its 100% tariff on Chinese electric vehicles (EVs) down to allow about 49,000 units in at a lower rate. In exchange, China is playing nice on Canadian canola and pork.
The U.S. is livid.
Jamieson Greer, the U.S. Trade Representative, called it "problematic" literally this morning. This complicates the Canada tariffs on United States because the U.S. views the entire North American continent as a single fortress against Chinese overcapacity. By opening a "back door" for 49,000 Chinese cars, Canada might have just handed the U.S. a reason to keep their own tariffs on Canadian goods in place indefinitely.
It’s a high-stakes gamble. Carney needs to protect Prairie farmers who live and die by canola exports, but he’s doing it by poking the bear in Washington.
How This Actually Hits Your Wallet
If you’re a business owner, you aren't looking at spreadsheets; you’re looking at survival. Deloitte’s 2026 outlook is calling this the year of "Reset over Resolutions." They expect the Canadian economy to grow by maybe 1.5%, which is... okay, but not great.
The real pain is in the uncertainty.
The Bank of Canada is basically frozen. They can’t drop rates too much because the tariffs are keeping inflation higher than it should be. When you tax steel, the cost of a new condo in Vancouver goes up. When you tax auto parts, the cost of a repair in Calgary goes up. It’s a trickle-down effect that hits the average person at the till.
"We are seeing a 20% jump in mortgage payments for those renewing in 2026," says one Bank of Canada report. Add a trade war on top of that, and the "main engine" of the Canadian economy—consumer spending—is starting to sputter.
The Buy Canadian Policy
One of the most surprising outcomes of this friction is the new federal "Buy Canadian" policy. It’s basically a mirror of the U.S. "Buy American" rules. If you’re a company bidding on a government bridge project or a new hospital, you now have to prioritize Canadian-made steel and lumber.
It sounds good for local jobs, right? In the short term, maybe. But experts at the Canadian Chamber of Commerce warn that this usually leads to higher costs for taxpayers because you’re eliminating cheaper competition.
What’s Next: The July 2026 CUSMA Review
Everything we’re seeing right now is just the opening act. July 1, 2026, is the big one. That is the six-year review of the Canada-United States-Mexico Agreement (CUSMA).
If the three countries can't agree to extend the deal, it could technically expire in 2036. That sounds far away, but for a company planning a 10-year factory investment, it’s tomorrow. The U.S. is expected to use this review to hammer Canada on everything from dairy supply management to the Online Streaming Act.
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Basically, they’re going to use the existing Canada tariffs on United States as a bargaining chip. "We’ll drop the steel duties if you let our milk into your grocery stores."
Survival Steps for 2026
If you're dealing with the fallout of these trade shifts, sitting around waiting for a "deal" is a bad strategy. The experts are suggesting a few moves that are actually working for mid-sized firms right now:
- Apply for Surtax Remission: The Canadian government has a process where you can ask for a refund on tariffs if you can prove you must buy the U.S. product because there’s no Canadian alternative. Many businesses don't realize this exists.
- Audit Your "Origin" Documentation: The CBSA is on a warpath in 2026. They are conducting "origin verifications" like crazy. If you claim a product is "made in the USA" to avoid a tariff, you better have the paperwork to prove it isn't just Chinese parts boxed in Ohio.
- Diversify, but Locally: The "Buy Canadian" rules are the new reality. If you can pivot your supply chain to a local vendor, even if they're 5% more expensive, you might save 25% in the long run by dodging the border taxes.
- Watch the EV Space: If you’re in the auto sector, the new deal with China is going to change the price of batteries and components. It might be a loophole, or it might be a trap.
The trade war didn't break Canada, but it definitely changed the locks. We’re moving toward a much more protected, much more expensive, and much more "Canadian-first" economy. Whether that’s a good thing depends entirely on which side of the border your warehouse sits.