On August 25, 2026, Canada announced the list of goods that will be subject to tariffs in retaliation against the latest round of US tariffs. Canada’s tariff list, affecting some $27.6 billion in imports, focuses on those sectors most affected by the US tariffs, namely: steel, dairy, appliances, agricultural equipment, furniture, pulp and paper, and electronics.
The retaliatory tariffs apply at a rate of either 15%, 25% or 50%. The targeted items fall into the following key product categories:
- Fish and seafood products – 25% tariffs on a wide variety of fisheries products.
- Dairy products – 50% tariffs on powdered milk and whey products, and cheeses, including those imported within TRQ access commitments.
- Cosmetics – 50% tariffs on cosmetics, namely perfumes and make-up preparations.
- Forestry products – 25% and 50% tariffs on a variety of wood products, including wood by-products, plywood and laminated panels, paper and paperboard products.
- Garment and textile products – 50% tariffs on a variety of garments and textiles made with natural and man-made fibres.
- Steel products – 50% tariffs on a range of steel products, including oil country tubular goods, line pipe, flat rolled steel products, steel long products, fasteners, and derivative steel products. Given that the US was excluded from the application of Canada’s steel TRQ system, these tariffs represent a meaningful increase in protections for Canada’s steel sector.
- Aluminum products – 50% tariffs on a variety of flat and long aluminum products and manufactured items made of aluminum, including aluminum doors and windows, and household articles.
- Appliances and other manufactured products – 15% – 50% tariffs on a variety of appliances, including refrigerators and freezers, air conditioners, dryers, ovens, and dishwashers.
- Heavy machinery and lifting equipment – 15% – 25% on a variety of machinery, including mowers, fork-lifts, works trucks, tower cranes, and chair lifts. These tariffs will supplement the existing counter-tariffs on US autos.
- Furniture – 50% tariffs on a variety of wooden household furniture products, including cabinets and vanities.
- Other consumer goods – 50% tariffs on a variety of other consumer goods, including smartphones, video game consoles, golf clubs, and fishing rods.
There is no exemption for US goods that comply with the rules of origin of the Canada-US-Mexico Agreement (“CUSMA”), which mirrors the treatment of CUSMA originating goods subject to the US tariffs under Section 338 of the Tariff Act of 1930.
The Government of Canada has confirmed that supports will be available for businesses and workers affected by the US tariffs (here).
Although Canada’s retaliatory tariffs are scheduled to enter into force only on September 8, government officials have indicated that there is no plan to modify the list of tariff items before that date. However, Canada’s tariff remission framework also remains available to assess requests for exceptional relief, such that companies will be able to apply for remissions in situations where the goods are not available in Canada, or where other exceptional circumstances apply. Duty drawback remains available for importers affected, at least in part, by the latest Section 338 tariffs.[1]
The countermeasures will not apply to US goods already in transit on September 8.
Background
After negotiations to conclude a trade deal between Canada and the United States failed, the US on August 22, 2026 imposed tariffs of 50% pursuant to Section 338 of the Tariff Act of 1930. McMillan’s prior bulletin on this issue is available here. The US targeted $28 billion in Canadian exports covering a range of products including chemicals, textiles, manufactured goods, dairy, alcohol and wood products. The Government of Canada vowed to respond “dollar for dollar.”
Canadian companies will be affected by the retaliatory tariffs in several ways. Some goods procured from the United States will now be subject to tariffs. Importers may need to respond by re-evaluating their sourcing. Canadian manufacturers, however, also may stand to gain from these new levies. Competing US goods will be made more expensive or even be priced out of the Canadian market due to the counter-tariffs, creating opportunities for Canadian producers to capture greater market share. In short, Canadian companies need to carefully assess the impact of these measures on their businesses. Here is what they need to know.
What goods are tariffed, when and by how much?
Canada will impose counter-tariffs on 874 lines of products. These tariffs are set to take effect on September 8, 2026. A range of imports will be covered with tariffs ranging from 15% (21 tariff lines), to 25% (449 tariff lines) up to 50% (404 tariff lines). Notably, Canada has not levied any additional tariffs against vehicles, although trailers and semi-trailers are captured. Additionally, no counter-tariffs have been applied on aircraft, engines or parts thereof, mirroring the similar US exclusion.
The tariffs will only apply to US originating goods eligible to be marked as such in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations.
The full list of imports covered by retaliatory tariffs is available here: List of products from the United States subject to counter-tariffs effective September 8, 2026 – Canada.ca
The Canadian sectors most affected by the counter-tariffs
The counter-tariffs seek to provide relief to sectors hit by either US Section 232 tariffs or Section 338 levies. Iron, steel and derivative products account for almost a third of the tariff lines covered (274 out of 874) and economic value. Most products in these sectors, as well as in the 29 tariff lines on aluminum products, are subject to a 50% tariff. This will make US imports subject to these tariffs that compete with Canadian production significantly less economical, and may enable the domestic industry to expand its domestic market share.
Machinery and electronics, wood products, paper, textiles and dairy, which were partially hit by Section 338, together account for about a fifth of tariff lines covered, but around a third of trade value affected. Tariffs range here from 15% to 50% depending on the products. The aim is again to allow Canadian-made products to gain market share in the Canadian market by reducing the competitiveness of US imports, and thereby support companies that have lost access to the US market as a result of the Section 338 tariffs.
A third basket of sectors has thus far remained largely unscathed by US tariffs, but is nevertheless targeted by Canadian retaliatory tariffs, mostly within the 25% bracket. This includes fish and seafood products, which make up almost 30% of tariff lines (254 out of 874) but cover only around 3% of the trade value of the tariffs. The rationale here may be to exert economic pressure in key Northeastern US swing states ahead of the November mid-term US election. Similarly, rail cars and coaches are covered by Canada’s retaliatory tariffs without being subject to US duties, and may have been selected for inclusion by the Government of Canada as a strategic sector.
Need to diversify sourcing
While sectors protected by counter-tariffs may benefit from import substitution, Canadian companies that import covered products from the United States will see their sourcing disrupted. Around 50% of covered tariff lines are classified by the United Nations as intermediate products and many of them are subject to the highest tariff bracket of 50%. That means the impact of the Canadian counter-tariffs is likely to affect midstream and downstream processing in Canada. In particular, companies that use covered US iron and steel products or derivatives will be severely affected, since US steel products have so far been excluded from the application of Canada’s tariff rate quota regime on steel product imports.
Companies sourcing inputs from the US should evaluate their supply chain for exposure. Mitigation strategies include switching to Canadian suppliers or, if unavailable, seeking third-party suppliers.
As trade uncertainty between the United States and Canada continues, it is critical that companies evaluate the risk of disruption due to announced, but also future tariffs. The situation remains volatile and companies cannot rely on an expectation that the announced tariffs will not enter into force or may be revoked shortly.
Weathering the storm
The Government of Canada has confirmed that supports will be available for businesses and workers affected by the US tariffs (here), including through the Strategic Response Fund. Importantly, importers may also request exceptional relief through Canada’s tariff remission framework.
As always, McMillan LLP’s market-leading international trade team is available to assist Canadian and international businesses.
[1] CBP Guidance: CSMS # 69606660 – GUIDANCE: Section 338 Additional Duties on Certain Goods of Canada
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William Pellerin co-leads the International Trade Group, which is widely recognized as a market leader in Canada. He has extensive experience litigating and advising on international trade law matters and disputes and is one of the very few private practice lawyers in Canada to have argued before the WTO Appellate Body and dispute settlement panels.
Rini Rashid is dual-qualified in Ontario, England and Wales, offering clients sophisticated cross-border counsel to navigate complex legal, regulatory and commercial challenges. She advises on all aspects of indirect tax, customs, trade remedies, sanctions, and geopolitical risk, providing strategic insight that integrates legal precision with business objectives.
Jan Nitoslawski is a skilled international trade lawyer with a litigation and advisory practice that focuses on trade remedies and federal regulatory matters. He represents clients in all aspects of trade remedies proceedings before the Canadian International Trade Tribunal and the Canadian Border Services Agency, and in judicial reviews and statutory appeals before the Federal Courts and binational panels.
Wolfgang Alschner is McMillan’s Academic in Residence. Working alongside McMillan’s market-leading international trade team, he translates leading-edge scholarship into practical, actionable strategies for clients navigating global trade rules, sanctions, export controls and cross‑border policy change.