If you listen to the political back-and-forth these days, you’d think the trade war between the U.S. and Canada was some brand-new invention that started in 2017. It wasn't. Honestly, the idea that the "world's longest undefended border" was always a frictionless conveyor belt for cheap goods is a bit of a myth.
Did Canada have tariffs on U.S. goods before Trump? Yeah, they absolutely did. But—and this is a big "but"—they weren't the sweeping, broad-based tariffs we see in the headlines today. Before the era of "America First" and the subsequent renegotiation of NAFTA into the USMCA (or CUSMA, if you're north of the border), trade was mostly governed by a "free trade" ideal that had plenty of messy, protectionist asterisks.
The NAFTA Era: Free Trade with Fine Print
Back in the 90s and early 2000s, the North American Free Trade Agreement (NAFTA) was the law of the land. For about 98% of things you’d buy—like cars, electronics, or clothes—the tariff was basically zero. The goal was total integration.
But Canada is fiercely protective of certain industries. While the U.S. and Canada were busy bragging about the billions in trade crossing the border daily, Canadian customs agents were still collecting massive duties on specific "sensitive" items.
The Dairy Wall: 270% Tariffs?
If you want to know what kept trade negotiators awake at night before 2016, look at a carton of milk. Canada uses a system called "Supply Management." It’s basically a way to keep Canadian farmers in business by controlling how much milk, cheese, and poultry is produced.
To make this work, they had to keep American dairy out. How? By slapping astronomical tariffs on anything over a certain quota. We aren't talking about a 5% or 10% tax. We're talking about tariffs that often hit 200% to 300%.
- Milk: Roughly 241%
- Cheese: About 245%
- Butter: A staggering 298%
Basically, Canada made it economically impossible for a Wisconsin dairy farmer to sell butter in Toronto without it costing more than a steak dinner. This wasn't a "Trump-era" development. This was the status quo for decades. The U.S. hated it. New Zealand hated it. But it was the price of admission for the rest of the free trade deal.
The Endless War Over Softwood Lumber
Then there’s the wood. If you've ever built a deck, you've probably used Canadian softwood lumber. This is perhaps the longest-running trade feud in history, dating back to the early 1980s.
The U.S. argument was simple: Canadian provinces own most of the forests and "subsidize" their timber companies by charging low "stumpage fees." The U.S. called this an unfair advantage. In retaliation, the U.S. would slap tariffs on Canadian wood. Canada would then fight back at the WTO or through NAFTA panels.
While this was often the U.S. hitting Canada with tariffs, Canada frequently used "export taxes" as part of settlements to avoid even harsher U.S. duties. It was a weird, circular tax game that meant "free trade" in lumber almost never actually existed. Between 1982 and 2016, there were only a few brief windows where wood moved across the border without some kind of extra fee attached.
The Cultural Exemption
Canada also has this thing called the "Cultural Exemption." They’re worried about being culturally swallowed by the massive American media machine.
Under NAFTA, Canada kept the right to protect its "cultural industries." This meant magazines, books, and broadcasting could be subject to different rules. While not always a direct "tariff" in the way a tax on steel is, it functioned as a barrier to keep American media companies from dominating the Canadian market. It was a way of saying, "We'll trade you car parts for free, but don't try to take over our TV stations."
Why the "Before" and "After" Look So Different
Before 2017, tariffs were usually "surgical." They were used like a scalpel to protect very specific groups of people—like Quebec dairy farmers or BC loggers. They were also mostly legal under the rules of the World Trade Organization (WTO).
When the Trump administration took over, the philosophy changed to using tariffs as a "sledgehammer" for broad geopolitical leverage. They used Section 232 of the Trade Expansion Act—a national security law—to put 25% tariffs on Canadian steel and 10% on aluminum.
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Canada’s response? They didn't just sit there. They hit back with retaliatory tariffs on everything from American yogurt and coffee to sleeping bags and motorboats. That’s when the average consumer really started feeling it.
Key Differences in Trade Barriers
| Category | Pre-2016 Status | Post-2016 Reality |
|---|---|---|
| Industrial Goods | Mostly 0% | Fluctuating (Steel/Aluminum) |
| Dairy & Poultry | Prohibitive (200%+) | Still high, but slightly more access |
| Softwood Lumber | Cycles of 15-25% duties | Continued litigation and high duties |
| Consumer Goods | Duty-free | Subject to "tit-for-tat" retaliation |
Fact-Checking the "Fair Trade" Narrative
It’s easy to get lost in the noise. You’ll hear people say Canada was "cheating" the U.S. for years. You’ll also hear people say the U.S. was "bullying" Canada.
The truth is somewhere in the boring middle. Canada did have very high tariffs on specific things to protect its internal politics. The U.S. also had its own set of protections (like "Buy American" provisions and sugar quotas).
The real shift wasn't that tariffs suddenly appeared out of nowhere. It was that the rules we used to settle these fights were being tossed out. Before, if Canada had a 270% tariff on butter, the U.S. would take them to a trade court. After 2016, the U.S. just started taxing Canadian steel and said, "Now what?"
How to Navigate the Current Trade Landscape
If you're a business owner or just someone trying to buy a new car or build a house, this history matters. The "stability" of the pre-Trump era is likely gone for good. Even with the USMCA in place, trade "skirmishes" are the new normal.
Here is what you should keep in mind:
- Check the "Rules of Origin": Just because a product is shipped from Canada doesn't mean it’s tariff-free. It has to be made there (mostly). If a Canadian company is just re-selling Chinese steel, you're going to get hit with a bill at the border.
- Monitor "Section 232" Actions: The U.S. still uses national security as a justification for tariffs. This can happen overnight, regardless of what's written in a trade agreement.
- Dairy is still the third rail: Don't expect Canadian milk prices to drop or American milk to flood the Toronto market anytime soon. Those 200%+ tariffs are deeply baked into the Canadian political identity.
Basically, the border is a lot more "expensive" than it used to be, but it was never truly free.
Actionable Insight: If you are importing goods from Canada, always verify the HS Code (Harmonized System code) for your product. Small shifts in how a product is classified can be the difference between a 0% duty and a 25% "emergency" surtax. You can use the Canada Border Services Agency (CBSA) customs tariff tool to check current rates before you ship.