US 50% tariff hits C$28bn of Canadian goods as Ottawa suspends trade talks

US tariffs of 50% have taken effect on roughly C$28bn of Canadian goods after Ottawa suspended trade negotiations with Washington, creating a new cost and working-capital shock across one of the world’s largest bilateral trading relationships.

Canadian prime minister Mark Carney halted the negotiations on Friday after what he described as last-minute US changes to proposed terms. The additional duties took effect at 12.01am eastern time on 22 August following a three-day postponement granted by the White House.

Canada has pledged dollar-for-dollar retaliation, although those counter-tariffs are not yet in force. Carney told provincial and territorial leaders that the response will take effect on the Tuesday after Labour Day, with details of additional support for affected businesses and workers also due to be announced.

Ottawa says the US measures affect around C$28bn of Canadian goods. The dispute includes Section 338 actions covering products linked to US complaints over Canadian treatment of areas including alcoholic beverages, dairy and motor vehicles.

For businesses importing affected goods into the US, the immediate consequence is a sharp increase in landed cost. Import duties are normally payable around the point goods enter the market, bringing forward a significant cash requirement before the importer has necessarily sold the inventory or collected from customers.

Canadian exporters face a different problem. A 50% surcharge can undermine the economics of existing orders, reduce demand or force suppliers and buyers to renegotiate prices and volumes.

Those effects can flow into trade-finance facilities. Importers may require greater working-capital capacity to finance the same volume of goods, while lenders and trade credit insurers may reassess customers whose margins or order books become more exposed to tariff-sensitive trade.

The Canadian government has promised further support, building on nearly C$25bn of measures provided during the wider trade dispute.

If Canada’s retaliation proceeds as announced, the liquidity impact will broaden again, with Canadian importers of US goods facing the same upfront tariff pressure already confronting their US counterparts.