The ongoing Canada-U.S. trade conflict saw another development this week as the White House announced a ban on Canadian dairy, motorcycles, and certain alcohol imports. Economists suggest that while these bans, coupled with new 50% tariffs on various products, may not have a significant overall impact on the Canadian economy, they could still negatively affect specific industries and unsettle business owners.
In response to Canada’s counter-tariffs, the White House imposed bans and increased tariffs on items like mattresses and paper products. However, based on analysis by Derek Holt from Scotiabank, the new tariffs will affect around $3 billion worth of Canadian goods, with removed tariffs applying to approximately $2 billion worth. Despite these figures, considering Canada’s substantial $527 billion worth of exports to the U.S. in 2025, the difference is relatively minimal.
The bans on alcohol, dairy, and motorcycles are expected to have limited effects, as Canada sends relatively small amounts of dairy and motorcycles to the U.S. Although alcohol exports are higher, reaching $550 million last year, the banned exports would only impact around $700 million worth of Canadian shipments to the U.S.
According to Holt, these actions by the U.S. administration are more about saving face than making substantive economic impacts, which he views as a positive sign. Additionally, the recent surge in oil prices due to Middle East tensions poses a greater economic risk compared to the new U.S. measures.
Chief economist Doug Porter at BMO also notes that the total value of newly tariffed items and those removed from the list amounts to about $2 billion each. While this may not alter the overall economic situation significantly, industries or regions targeted by the tariffs could experience adverse effects, as highlighted by Porter.
For the alcohol industry, the continued targeting of Canadian products raises concerns, especially for spirits producers who heavily rely on exports to the U.S. Despite this, many alcohol products were already subject to 50% tariffs, which essentially restricted their access to the U.S. market.
Matt Johnston, from Collective Arts brewery, explains that the 50% tariffs had already posed significant challenges for their beer exports to the U.S. With plans to focus on domestic and international markets outside the U.S., they aim to offset the lost sales from the American market.
Although the direct impact of the bans and tariffs may be limited, economist Tu Nguyen from RSM Canada emphasizes the potential indirect consequences on business confidence. The escalating trade tensions and uncertainty could have a more profound effect on businesses than the actual economic figures suggest, especially with the short notice given for some of the new measures to take effect.
