How Canada Could Be Impacted by Trump’s Reciprocal Tariffs

U.S. President Donald Trump, joined by Secretary of Commerce Howard Lutnick, signs an executive order on reciprocal tariffs in the Oval Office of the White House in Washington, D.C., on Feb. 13, 2025. Andrew Harnik/Getty Images

News Analysis

U.S. President Donald Trump signed a new presidential action on tariffs on Feb. 13, this time directing his officials to study how to reciprocate tariffs other countries have put on the United States.

Canada, with its free-trade deal with its southern neighbour, could be in a better position than most on tariffs. The Trump administration, however, could pursue other measures impacting trade, such as regulations, taxes, and subsidies, something Canada has plenty of.

“I have decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them no more, no less,” Trump said from the White House on Feb. 13 when announcing the measure.

The U.S. president added that in “almost all cases” other countries are “charging us vastly more,” but “those days are over.”

As opposed to the 25 percent blanket tariff approach adopted on steel and aluminum earlier that week, this exercise will require a line-by-line study of trade measures each country has in place.

The U.S. administration said it aims for the plan to come into effect in April.

The White House has singled out Canada’s Digital Services Tax, which came into force in June 2024. This tax requires large foreign and Canadian businesses to pay tax on revenue earned through engaging with online users in Canada.

Concerns around this issue were also present during the Biden administration, with the U.S. trade representative identifying the measure as a trade barrier, noting that such taxes “discriminate against U.S. companies.”

The Trump White House said “only America should be allowed to tax American firms,” adding that these non-reciprocal taxes cost U.S. businesses over US$2 billion a year.

For their part, tariffs that Canada imposes on the United States are limited due to the USMCA free-trade agreement between those two countries and Mexico.

Meanwhile, a large number of the items still covered by tariffs in the trade deal are related to products in Canada’s agricultural supply management system, covering dairy, eggs, and poultry, which regulates prices and supply and sets tariff-rate quotas (TRQs). A TRQ applies a preferential tariff rate to imports of a particular product up to a specified quantity, and a higher rate to imports of that product exceeding that limit.

For example, Canada’s tariff schedule under the USMCA mentions a 1.90 cents/kilogram tariff on turkeys within TRQ coming from the United States.

The U.S. tariff schedule includes tariffs on Canadian products such as maple syrup. The product is taxed at 16.9 cents/kilogram plus 5.1 percent.

Both countries impose tariffs on various types of whey, albeit using different metrics. Canada imposes a 3.32 cents/kilogram tariff on U.S. powdered whey within TRQ, and a 208 percent tariff, but “not less than $2.07/kg,” on those imports exceeding the quota. The U.S. tariff for dried whey is 87.6 cents/kilogram.

Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, said that at first glance the reciprocal tariffs that could be imposed around supply-managed goods likely won’t have a major impact on Canada.

The food sector under supply management is not a major exporter to the United States, he said in an interview with The Epoch Times.

Charlebois noted that if the United States reciprocates the high tariff that Canada applies on eggs, for example, it will end up backfiring, as the country deals with an eggs shortage.

He also said there won’t be a “moral case” for Canada to respond to this U.S. trade action given Trump is only reciprocating. “We can’t really blame the Americans since we’re also quite protectionist,” he said.

The Canadian government is currently trying to avert an array of U.S. tariffs proposed by Trump citing security concerns.

Trump has paused the 25 percent tariffs on all Canadian goods and 10 percent tariff on Canadian energy while his administration reviews Canada’s actions to stem illegal immigration and fentanyl trafficking. The pause expires March 4.

The universal 25 percent tariffs on steel and aluminum are set to take effect on March 12. Trump said the undercutting of the U.S. market, leading to erosion of the country’s industrial base, is a national security issue. A large quantity of steel and aluminum imported into the United States comes from Canada.

To avoid the various tariffs, Finance Minister Dominic LeBlanc was in Washington, D.C., earlier in February, where he met with senior Trump officials.

“What the Americans have said to us privately, and what they’ve said publicly, is that we have a number of weeks to work together,” LeBlanc told reporters on Feb. 12. “And President Trump’s words were very precise: to structure an economic deal with Canada.”