Canada-U.S. Trade

Overview of U.S. tariffs

As of Tuesday, March 4th, U.S. President Trump has imposed 25% tariffs on all imports from Canada and Mexico, with the exception of Canadian energy, which will face a 10% tariff. Canada has responded with immediate 25% tariffs on $30-billion worth of goods. 25% tariffs will be imposed on an additional $125-billion worth of American products on March 25th.

In addition to regular meetings with federal and provincial officials across Canada, we are engaging with U.S. trade representatives to emphasize the importance of free trade between Canada and the U.S.

We’re committed to putting your voice front and center in all trade-related discussions. Tell us how U.S. tariffs are impacting your business – your input is crucial in shaping our advocacy efforts.

Why are U.S. tariffs being imposed on Canadian goods?

Initially, the U.S. administration claimed these measures were necessary to address the flow of illegal drugs, particularly fentanyl, and illegal immigration, which it considers significant threats to national security. The president has also highlighted the trade deficit between the U.S. and Canada as a reason for the tariffs.

To avoid the initial implementation date of February 4th, a deal was reached to delay the tariffs by one month after Canada and Mexico agreed to introduce new border security measures that addressed U.S. concerns. Canada has invested in increased enforcement at the border in an effort to satisfy the U.S. and prevent economic penalties. (See below “What has Canada done to strengthen it’s border?”)

At this time, it remains unclear what additional steps Canada may need to take to permanently remove tariffs. While the initial agreement focused on border security, President Trump has suggested he is seeking broader economic concessions, though no details have been provided.

For more information, please see the White House Fact Sheet – President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico, and China.

How is Canada responding?

The Canadian government has responded with retaliatory tariffs of 25% on $155 billion worth of U.S. goods entering Canada. These tariffs will be imposed over two phases: an immediate 25% tariff on $30-billion worth of goods effective March 4th, followed by a 25% tariff on an additional $125-billion worth of goods effective March 25th.

The tariffs will only apply to goods originating from the U.S., as per Canada’s country of origin rules for CUSMA.

The initial $30 billion list of goods includes items like orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper. The full list can be found here.

For more information, refer to Finance Canada’s announcement.

AB

Calling on provinces to reduce red tape and interprovincial trade barriers to bolster economic competitiveness.

BC

BC’s liquor branch will no longer buy alcohol from U.S. states that voted for President Trump (“red states”).
Government-owned liquor stores are removing brands from U.S. red states.
B.C. government and its Crown corporations will prioritize Canadian suppliers when procuring goods and services.

MB

Manitoba’s liquor authority (MBLL) will remove American products from liquor marts and will no longer buy American alcohol.
Created a tariff hotline for questions, concerns, and feedback.
Launched a Buy Local campaign.
Opt-in tax deferral of the Health and Post Secondary Levy (payroll tax) and the Retail Sales Tax, starting with the February tax period for 3 months.

NB

New Brunswick liquor authority (ANBL) is removing U.S. products from its shelves and will not order U.S. alcohol until further notice.
Reviewing government procurement to suspend new contracts with U.S. companies, except for critical services that cannot be immediately replaced.
Supporting New Brunswickers to buy local.
For affected employees:
- Flexible labour market support program that will provide support and services to those whose jobs have been affected by the tariffs.
For businesses:
- Working capital loans of up to $5 million providing financial support to help maintain operations for tariff impacted companies.
- $40 million competitiveness and growth program to enhance the long-term sustainability of New Brunswick’s large export-intensive companies.
- $4 million to support the New Brunswick Fisheries Fund.
- Leveraging of existing $30 million strategic assistance budget funding to help mitigate the impact of tariffs, support contingency planning, market diversification and productivity improvements.
On interprovincial trade barriers:
- Remove 9, narrowing 1, and considering 6 party-specific exceptions under the Canada Free Trade Agreement (CFTA).
- Automatically recognize certified workers from another jurisdiction for a minimum of 120 days allowing them to work while obtaining any necessary provincial credentials.
- Plans to pass legislation to remove personal restriction on importing more than 12 pints or 6.8 litres of beer. This will require a legislative amendment to the Liquor Control Act once the legislature is sitting again on March 18.
Promotion of “NB Made”:
- Tools for people to identify items made in the province.
- In support of Savour NB, Excellence NB, Eat Local NB and Buy Local for Good.
Promotion of the Business Navigator service for businesses with questions.

NFLD

Pulling U.S. products from liquor stores across the province.
Encouraging Newfoundlanders to buy local.
Review of U.S. procurement, stop it where possible.
Working with federal and provincial governments to remove internal trade barriers.

NS

Limiting access to provincial procurement for American businesses.
Looking for opportunities to cancel existing contracts and will maintain the option to reject bids outright because of President Trump’s tariffs.
Doubling the cost of Cobequid Pass tolls for commercial vehicles from the United States, effective Monday, February 3.
Removing all alcohol from the United States from the shelves of the Nova Scotia Liquor Corporation effective Tuesday, February 4.
Budget 2025/2026 set aside $200 million for a contingency fund to help the province deal with the economic impact of tariffs.

NWT

Reviewing their procurement policies to eliminate purchases from U.S. companies where possible.
Halting the Northwest Territories Liquor and Cannabis Commission’s purchase of American goods.

ON

Ontario’s liquor authority (LCBO) is removing all U.S. alcohol from its shelves and ordering catalogue for restaurants and retailers.
Cancelled the Ontario government’s $100 million contract with Elon Musk’s Starlink.
Ban American companies from provincial contracts while U.S. tariffs are in place.
Potentially stop nickel shipments to the U.S.
Potentially include a 25% surcharge on Ontario energy exported to Minnesota, Michigan and New York, and possibly shut off Ontario power to these U.S. states.
Plans to legislate a “Buy Ontario first, Canada second” procurement policy.
Encourage all retailers to add a Canadian flag next to prices of Canadian products, with potential legislation if retailers do not comply.

Tariff mitigation measures:

A total of $3B in Employer Health Tax relief/more Workplace Safety and Insurance Board surplus funds returned to eligible businesses.
$10B in cash-flow support for Ontario employers through a six-month deferral of provincial taxes.
$5B for major industries through a new Protect Ontario Account to address operational challenges, restore supply chains, and restructure to find new customers and keep people employed.
$120M in support for restaurants and bars by increasing the Liquor Control Board of Ontario wholesale discount from 10%-15%.
$40M for a new Trade-Impacted Communities Program to support municipalities impacted by tariffs.
$300M to expand the Ontario Made Manufacturing Investment Tax Credit to support investment in buildings and machinery & equipment used for manufacturing and processing.
$600M for the Invest Ontario Fund to attract investment in advanced manufacturing, life sciences, and technology.
Prioritize Ontario steel and forestry for provincial projects, purchase Ontario-made vehicles for government use, and help local innovators access more government procurement opportunities – and urge municipalities to do the same.
Urge the federal government to fairly and quickly distribute retaliatory tariff revenue to impacted workers and businesses.
Enhance termination and severance rights for workers affected by tariff layoffs and closures.

PEI

Removing US liquor in retail stores, bars, restaurants.
Export diversification fund of up to 60% ($32K max) of expenses (such as trade show expenses, marketing, etc.)
Review of procurement process to identify alternatives.
Tariff Working Capital Program: Business loan to affected industries (details to be available later).
Doubling global trade missions organized for export diversification.

QC

Premier François Legault announced that his government is:

Quebec’s liquor authority (SAQ) is removing U.S. alcohol from its shelves. It will also stop supplying U.S. alcohol to grocery stores, agencies, bars and restaurants.
Establishing a unit that will explore market diversification options for the forest industry in Quebec.
$20M to train workers in affected sectors.
Financial assistance program (FRONTIERE) to companies in the manufacturing or a primary sector subject to U.S. tariffs.
Chantier productivité - increasing its financial assistance in the form of interest-free repayable loans and may grant non-repayable contributions to companies presenting investment projects of more than $10 million that stand out in terms of productivity.
Penalties of up to 25%, effective immediately, on bids from American companies that participate in public calls for tender without having establishments in Quebec or with its commercial partners.
Program (PANORAMA) to help companies export outside de U.S.

SK

Saskatchewan’s liquor authority (SLGA) will no longer buy alcohol that is produced in the U.S. Retailers may still choose to sell their remaining inventory.
Saskatchewan’s government will prioritize Canadian suppliers when procuring goods and services, with the goal of reducing or eliminating U.S. suppliers.
Paused all capital projects as they ask contractors to report on American products/projects and reduce the amount.
All pipelines that go through Saskatchewan are now considered pre-approved. Despite this, all cross-provincial pipelines must still be reviewed by the Canadian Energy Regulator.

YK

Directing the Yukon Liquor Corporation to stop purchasing beer, wine and spirits from the U.S. Stores may continue to sell products they already have in stock.
Reviewing territorial government procurement policies to exclude U.S. companies and minimize the purchase of U.S. goods and services, wherever possible.
Allocating $1 million to develop an assistance program, complementary to federal support programs, to help Yukon businesses adapt to the uncertain economic environment created by these tariffs. This program will be introduced and funded through budget 2025-2026.

CAN-U.S. Tariffs - Key Dates

Target Country	Rate	Date
Canada and Mexico	25%	March 4
China	20%	10% on Feb. 4; additional 10% on March 4
Canada's Phase 1 tariff response	25%	March 4
All foreign steel and aluminum	25%	March 12, which could be added on top of Canada's existing 25% on all goods.
Canada’s Phase 2 tariff response	25%	March 25
Europe	25%	TBC
Trump's reciprocal tariffs (world)	TBC	April 2: Trump administration's plan to counter with reciprocal tariffs

CFIB's advocacy efforts

We’re actively working with governments to minimize the impact of U.S. tariffs on your business. Our efforts include:

Sharing the views of SMEs with all levels of government through:
- Collecting data on small business concern surrounding tariffs data in December 2024.
- First letter sent to governments in January 2025.
- Collecting additional data through a dedicated tariff survey. Presented this data to key trade officials from all provincial and federal governments through a government stakeholder briefing. See here for results.
- Second letter sent to governments sharing the key findings of CFIB’s trade survey.
- See here our work on reducing internal trade barriers.
The federal government has created a fact sheet and a key messages document on Canada’s shared border and trade.

Services and programs

Tariffs and international trade can be complex. Here are federal government services and programs that can assist you:

Trade Commissioner Service	Business Development Bank of Canada	Export Development Canada	Employment and Social Development Canada
The Trade Commissioner Service (TCS) offers Canadian businesses with funding and support programs, international opportunities, and access to their global network of trade commissioners in over 160 cities. Visit their dedicated webpage on navigating current U.S. tariffs here.	Business Development Bank of Canada (BDC) provides financing solutions and advice to businesses of all sizes, industries, and at every stage of growth.	Export Development Canada (EDC) helps Canadian companies of all sizes succeed in global markets by providing trade knowledge, financial solutions, insurance, equity, and critical connections.	ESDC’s Work-Sharing Program helps avoid layoffs when businesses experience a temporary decrease in normal business activity that is beyond the control of the employer.

Additionally, the federal government is taking steps to mitigate the economic impacts of potential tariffs, such as:

Establishing a remission process to assess requests for exceptional tariff relief.
Committing to support businesses and workers with additional measures as needed.

Here are some provincial government services and programs that can assist you:

BC	BC’s Export Navigator portal Country trade profiles for selected countries, regions and all U.S. states Trade and Invest BC: Export Programs for BC Businesses
SK	Saskatchewan Trade and Export Partnership (STEP) (In partnership with SK Gov): Saskatchewan Trade & Export Partnership (STEP) « Prosperity through trade » STEP is a member-driven, non-profit organization that’s committed to increasing Saskatchewan’s export activities. They link Saskatchewan suppliers with the global marketplace.
MB	Export Support Program: Export Support Programming provides financial assistance to Manitoba SME’s enterprises to participate in trade shows or missions outside of the province, with the goal of expanding existing or entering new export markets.
ON	Please visit our Ontario election Promise Tracker for trade-related and other Party promises.
NS	A Guide to Invest Nova Scotia’s Programs and Resources
NFLD	The Business Investment Program: Business Investment Program provides term loans to small and medium-sized enterprises (SMEs) in strategic growth sectors. The fund is also available to businesses which have export potential and require assistance to enter or expand in external markets.
YK	The Economic Development Fund: Yukon Economic Development Fund Eligible projects include those that support business innovation, sustainability and planning; encourage economic diversification through market support; and increase business competitiveness through capacity and capital development.

What are tariffs?

Tariffs are taxes imposed on goods as they cross international borders, typically calculated as a percentage of the imported good's total value. The 25% U.S. imposed tariffs on Canadian products will increase the costs of goods imported into the U.S. from Canada. These tariffs are paid by the importer (typically U.S.-based businesses) to U.S. Customs and Border Protection (USCBP).

In response, Canada has announced plans to implement its own tariffs on U.S. goods to level the playing field. Hundreds of American-made goods will be affected. This means that Canadian importers would be responsible for paying those tariffs to Canada Border Services Agency (CBSA).

Will my U.S. customers have to pay the new tariffs if my goods are already in transit?

No, it is our understanding your goods are exempt from the new tariffs if they’re in their final mode of transit when the tariffs took effect (March 4th at 12:01am EST).

How will U.S. tariffs impact my pricing and sales in the U.S.?

The 25% U.S. imposed tariffs on Canadian products will increase the costs of goods imported into the U.S. from Canada. These tariffs are paid by the importer (typically U.S.-based businesses) to U.S. Customs and Border Protection (USCBP).

Are there any exceptions or exemptions for Canadian businesses under these tariffs?

There are currently no exceptions or exemptions, other than energy resources from Canada will have a lower 10% tariff.

What is de minimis treatment, and how does the Executive Order impact it?

De minimis treatment allows certain low-value imports (under $800) to enter the U.S. without being subject to tariffs or duties. De minimis treatment remains in place for the time being, although it will eventually be phased out.

How can the US impose 25% tariffs when CUSMA is in effect?

While CUSMA eliminates most tariffs on goods traded between Canada, the U.S., and Mexico, it does not prevent the application of certain tariffs outside the agreement. In fact, CUSMA includes a clause on essential security, which states that nothing in the agreement precludes any of the parties from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.

For this reason, the U.S. can impose tariffs national security reasons.

Will tariffs apply to services?

No, tariffs are taxes imposed on physical goods as they cross the border. They do not apply to intangible property, such as software or technology licenses, or to cross-border services.

Will my business have to pay new tariffs if my goods are already on their way from the U.S.?

No, goods that are already in transit to Canada when the tariffs take effect, on March 4th at 12:01am EST, will be exempt.

Are goods being imported under CUSMA subject to tariffs/duties?

Free Trade Agreements (FTAs), like Canada-United States-Mexico Agreement (CUSMA), include provisions to ensure goods benefit from the most advantageous tariff treatment. While many products imported from the U.S. are not subject to tariffs or duties, some items may still be. To determine whether your goods qualify for duty-free treatment under CUSMA, they must meet the specific rules of origin requirements and be supported by proper documentation, such as a certificate of origin.

You can use the Canada Tariff Finder to look up your HS Code and determine applicable duties. However, for the most accurate and reliable guidance, it’s always best to consult with a customs broker.

What has Canada done to strengthen the border?

Canada has invested over $1 billion in new equipment and security measures to combat drug trafficking and illegal immigration, which aims to address U.S. concerns and avoid Trump’s tariffs. Specifically, Canada has increased investment in technology (such as, new drones and helicopters), increased personnel, and enhanced intelligence sharing. The government has also introduced new policies and programs to improve security and efficiency. Despite these investments and efforts, Trump is proceeding with tariffs, stating that Canada hasn't done enough.

See here for more detail on Canada’s Border Plan.

How much of U.S. drug and immigration issues are linked to Canada?

According to U.S. and Canadian government data:

Less than 1% of fentanyl entering the U.S. comes from Canada.
Over the past two years, about 6% of illegal immigrants at the U.S. border were stopped at our border.

While Canada’s new measures are having some impact, the overall numbers suggest the northern border is a small part of the larger issues the U.S. is facing.

If my business exports goods to Mexico, but they are shipped through the U.S., will they be impacted by tariffs?

No. Goods that are simply transiting through the U.S. on their way to Mexico should not be impacted by tariffs. As long as the goods do not undergo any changes or enter U.S. commerce, they are not subject to the U.S. tariffs. However, if the goods are processed or enter the U.S. market before continuing to Mexico, they may be subject to the applicable tariffs.

How can federal and provincial governments ease financial pressures on SMEs?

Canadian governments need a unified and proactive response to minimize harm to businesses and the economy. Governments must focus on reducing the tax burden, cutting red tape, addressing internal trade barriers, and strengthening border measures to help small businesses stay competitive.

Where are Canada’s other Free Trade Agreements (FTAs)?

Canada has 15 free trade agreements (FTAs) covering 51 countries¹. These agreements provide Canadian businesses with preferential market access, reduced tariffs, and stronger trade rules. Here’s an overview of some of Canada’s key FTAs:

This image illustrates a map of Canada, where Canada’s Free Trade Agreements are linked to and shown for different countries/regions — Image description

¹ Global Affairs Canada (GAC), Canada’s State of Trade 2022: The Benefits of Free Trade Agreements: A review of trade and investment in the previous year and a look at how free trade agreements have benefitted Canada.

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Canada-U.S. Trade War

BREAKING: The Trump Administration has ordered a pause in tariffs on Canadian goods compliant under the Canada-U.S.-Mexico Free Trade Agreement. Additionally, potash will now only be subject to a 10% tariff.

Overview of U.S. tariffs

Why are U.S. tariffs being imposed on Canadian goods?

How is Canada responding?

Tracking Provincial Countermeasures

AB

BC

MB

NB

NFLD

NS

NWT

ON

PEI

QC

SK

YK

CAN-U.S. Tariffs - Key Dates

CFIB's advocacy efforts

Supporting local businesses has never been more important.

Services and programs

Frequently Asked Question

What are tariffs?

Exporting Canadian goods to the U.S.

Will my U.S. customers have to pay the new tariffs if my goods are already in transit?

How will U.S. tariffs impact my pricing and sales in the U.S.?

Are there any exceptions or exemptions for Canadian businesses under these tariffs?

What is de minimis treatment, and how does the Executive Order impact it?

How can the US impose 25% tariffs when CUSMA is in effect?

Will tariffs apply to services?

Importing U.S. goods into Canada

Will my business have to pay new tariffs if my goods are already on their way from the U.S.?

Are goods being imported under CUSMA subject to tariffs/duties?

Other frequently asked questions

What has Canada done to strengthen the border?

How much of U.S. drug and immigration issues are linked to Canada?

If my business exports goods to Mexico, but they are shipped through the U.S., will they be impacted by tariffs?

How can federal and provincial governments ease financial pressures on SMEs?

Where are Canada’s other Free Trade Agreements (FTAs)?

For more information, check out these resources:

One in five small business owners are facing cancelled or delayed orders as Canada-U.S. trade uncertainty continues

CFIB statement on pause in Canada-U.S. tariffs

CFIB statement on President Trump’s 25% tariffs

U.S. tariffs would force price hikes and drive up the cost of doing business across Canada

CFIB statement on proposed US tariffs

Your Voice Highlights: The shadow of tariffs

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