Executive summary

On 25 August 2026, the Minister of Finance and National Revenue announced that following the United States (US) decision to impose a new 50% tariff on CA$27.6b of Canadian goods effective 22 August 2026, Canada will match the US tariffs dollar for dollar, rate for rate, with additional Canadian tariffs on US goods.

Canada announced that it will impose counter-tariffs covering CA$27.6b in imports from the US, effective 8 September 2026, with a focus on sectors that are most impacted by US tariffs.

The government also announced the introduction of a CA$7.5b package of new support measures for Canadian workers and businesses, particularly small and medium-sized businesses, in sectors most affected by the new US tariffs.

Additional tariffs on US goods

Canada announced that as of 12:01 a.m. Eastern Time on 8 September 2026, counter-tariffs of 15%, 25% and 50% will take effect on products drawn from those targeted by US Section 338 and Section 232 tariffs, with the rate for each product matching the corresponding US rate.

The counter-tariffs will apply to products targeting CA$27.6b in imports from the US with a focus on sectors most impacted by US tariffs, such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.¹ The counter-tariffs will only apply to goods originating from the US² and will not apply to goods that are in transit to Canada on the day on which the counter-tariffs come into force.

As of 26 August 2026, the listed goods that will be subject to 50% counter-tariffs include steel and aluminum products that were previously subject to a 25% counter-tariff, furniture, and clothing and apparel. Goods that will be subject to 25% counter-tariffs include appliances, certain dairy products (such as cheese), and certain steel and aluminum derivative products.³ Other existing counter-tariffs against the US, including motor vehicles, will also continue to apply.

The counter-tariffs represent an expansion of previous measures adopted by Canada in response to US tariffs. On 4 March 2025, Canada imposed counter-tariffs in the form of a 25% surtax against imports of certain US-origin goods, with an estimated value of CA$30b. This was followed on 13 March 2025 by counter-tariffs covering an additional CA$29.8b worth of US-origin products, including a 25% reciprocal tariff on US-origin steel and aluminum products. On 9 April 2025, further counter-tariffs in the form of a 25% surtax were imposed on motor vehicles originating in the US in response to US tariffs on automobiles and automobile parts. As of 1 September 2025, Canada removed the counter-tariffs imposed on many US-origin goods, although measures remained in place for steel and aluminum and motor vehicles (see EY Global Tax Alert, Canada removing tariffs on certain US goods; Canadian business support measures announced, dated 19 September 2025).

For more information on previous measures, see the following EY Tax Alerts:

• EY Global Tax Alert, Canada responds to US Executive Orders imposing tariffs on imports originating in Canada, dated 11 March 2025
• EY Global Tax Alert, Canada imposes new tariffs on US-origin products in response to US tariffs on Canadian steel and aluminum products, dated 17 March 2025
• EY Global Tax Alert, Canada | Latest Canada-US trade developments — as of 10 April 2025, dated 16 April 2025

Duty relief and deferral

Canada's tariff remission framework remains available to assess requests for exceptional relief. Under this framework, Canada will consider requests for remission of the tariffs to address situations in which goods used as inputs cannot be sourced domestically, either on a national or regional basis, or sourced reasonably from non-US sources; in other exceptional circumstances that could have serious adverse impacts on the Canadian economy, requests for remission will be considered on a case-by-case basis. Depending on how the new tariffs are implemented, other avenues for remission may be available.

The duty-drawback and duties-relief programs likewise remain available for surtax paid or payable on goods, subject to the duty refund provisions of the Canada-United States-Mexico Agreement (CUSMA).

The availability of remission or other relief will depend on each business's particular facts and circumstances. Businesses may wish to seek professional support to identify and assess potentially available avenues for relief.

New support measures for Canadian businesses

Canada announced the introduction of a CA$7.5b package of new support measures, building on the nearly CA$25b in supports the government has provided since 2025. This new package of support measures includes:

• An additional CA$1.5b investment through the Regional Tariff Response Initiative, delivered by Canada's regional development agencies, aimed at providing support to small and medium-sized enterprises, including liquidity support of up to CA$2m to manage the pressures related to tariffs
• A new CA$500m liquidity stream under the Pivot to Grow program offered by the Business Development Bank of Canada (BDC) to help businesses manage immediate cash-flow pressures (providing loans ranging from CA$250,000 to CA$5m, with interest-only payments over 36 months) in addition to targeted programs for the forestry, steel and aluminum sectors
• Broadened access to the BDC's direct tariff-related support programs (including the Pivot to Grow program and the targeted programs for the forestry, steel and aluminum sectors) by lowering the minimum revenue requirement for applicants to CA$1 million
• An additional CA$2b investment through the new Canada Strong Diversification Fund, providing more flexibility to support tariff-affected businesses with shovel-ready projects that support ongoing capital maintenance
• A new suite of CA$3.5b Rapid Response Supports for Workers and Employers to help Canadians affected by tariffs (in addition to providing income support and job matching opportunities to workers, the establishment of a new Worker Retention and Retraining Program will help employers keep their workforce through a difficult period)
• New flexibilities to the Large Enterprise Tariff Loan facility, administered by the Canada Enterprise Emergency Funding Corporation.

Next steps for affected businesses

Businesses affected by these changes may want to consider taking the following steps, depending on their particular circumstances:

Step 1 — Review the list of affected products

• Review the list of products that Canada has indicated will be subject to counter-tariffs.
• Determine whether products imported from the US are covered and, if so, the applicable tariff rates and associated cost implications.

Step 2 — Consider eligibility for tariff relief and support programs

• Examine whether tariff relief may be available through the tariff remission framework.
• Assess whether financial support may be available through new or existing measures to provide support to Canadian businesses.

Step 3 — Evaluate plans moving forward

• Review tariff classification, origin calculations and valuation procedures for customs purposes to help ensure that goods imported from the US are being properly reported.
• Adjust pricing plans to reflect tariff costs; ensure correct duties are assessed and paid; and use appropriate customs procedures to enhance trade effectiveness (e.g., first-sale rule, drawback and duty deferral to address payable customs duties and tax obligations).
• Redesign supply chains and sourcing locations to improve operations and business resilience.