How Canada could hit back to hurt the US economy - and Trump

August 25, 2026

Canada is exploring various retaliatory measures against US tariffs despite sending 70% of its exports to America. Prime Minister Mark Carney is preparing strategic "dollar-for-dollar" countermeasures targeting products like steel, dairy, and agricultural equipment, while keeping energy restrictions as a potential option. Canada has already demonstrated its economic leverage through provincial alcohol bans that caused American wine exports to Canada to plummet 78%, resulting in over $357 million in losses.

Who is affected

The United States (particularly 26 states where Canada is the top customer)
Prime Minister Mark Carney and the Canadian government
Ontario Premier Doug Ford
Canadian workers and businesses
US wine and spirits industries
American homes and businesses in Michigan, Minnesota, and New York (1.5 million affected by potential electricity restrictions)
Canadians (majority oppose significant concessions based on polls)

What action is being taken

Canada is planning dollar-for-dollar retaliatory duties on steel, dairy, appliances, agricultural equipment, electronics, and pulp and paper
Canada's Finance Department is preparing to announce additional measures to protect workers and businesses on Tuesday
Provincial alcohol bans on US products remain in place in 11 of 13 Canadian provinces and territories
Canadians are avoiding travel to the US

Why it matters

This trade dispute matters because Canada holds significant economic leverage over the US despite being the smaller economy. Canada supplies the majority of US natural gas and electricity imports, 60% of crude oil imports, and is the world's top supplier of potash used in fertilizers. As the top customer for 26 US states and among the top three for 45 states, Canada's retaliatory measures could cause substantial economic pain across America. The existing alcohol ban has already demonstrated Canada's ability to inflict damage, with American wine exports dropping 78% and causing over $357 million in losses, showing that Canadian countermeasures can significantly disrupt US industries.

What's next

Canada's Finance Department will announce additional measures to protect workers and businesses on Tuesday
The list of Canadian retaliatory duties is still being finalized
Energy surcharges and restrictions on critical mineral exports remain potential options under consideration

Read full article from source: BBC