(Not So) Fun Fact: The administration’s newly adjusted Section 338 tariffs would impact approximately $19.9 billion worth of U.S. imports from Canada, while import bans hit $967 million worth of Canadian products, primarily alcoholic beverages.

The U.S.-Canada Trade War Escalates

What’s Happening: The U.S.-Canada trade war escalated this week as Canadian retaliatory tariffs took effect on roughly $20 billion worth of U.S. goods on September 8. The White House retaliated to Canada’s retaliation, issuing 5 new proclamations adjusting the Section 338 tariffs imposed on approximately $20 billion worth of Canadian goods on August 22. These proclamations – justified as a response to Canada’s heightened discrimination against U.S. commerce – add new goods to the 50-percent tariff list, remove certain goods from the initial list, and completely ban the import of various Canadian products. The bans apply to certain motorcycles, wines, liquors, packaged beers, and whey, to name a few. Canadian Prime Minister Mark Carney released a video stating that Canada has what it needs to pivot away from the United States and prosper despite the current trade war, although he notes the pivot will carry a cost. This comes alongside reports that Canada plans to strengthen its trade relationships with both New Zealand and the European Union (with whom Canada is also working to bolster security ties). The latest U.S. trade actions are set to take effect in the coming weeks, with modifications to the 50-percent tariff list on September 15 and import bans on September 29.

Why It Matters: There are some noteworthy aspects to this recent slew of presidential proclamations with economic, legal, and political implications. Let’s start with the economic consequences. Canada’s recent trade actions add a little under $20 billion worth of U.S. goods to its retaliatory tariff list, with a total of around $50 billion of U.S. exports now subject to tariffs of between 15 and 50 percent, in response to U.S. tariff policies since 2025. The total amount of U.S. exports subject to the 50-percent tariff rate is nearly equivalent to the amount of Canadian exports subject to U.S. 50-percent Section 338 tariffs. The September 8 White House proclamations ban $967 million in imports from Canada, 87 percent of which fall under the alcoholic beverages proclamation. The emphasis on Canadian alcohol imports is likely in response to Canadian provinces boycotting U.S. alcohol, which has greatly impacted U.S. sales for months. Most of the imports that are banned were previously subject to the 50-percent tariff rate, but over $500 million in imports are now banned that were not included in the initial Section 338 tariffs, according to the Shipment’s analysis. Furthermore, $1.8 billion worth of imports were added to the 50-percent tariff list while $1.7 billion were removed, meaning there has not been a substantial change to the value of imports impacted. The caveat is that the modifications specify that Section 232 national security tariffs are now eligible to stack on top of Section 338 tariffs, greatly reducing the number of possible exemptions for the U.S.-Canada trade war. In total, the Shipment estimates that $19.9 billion in imports are subject to a 50-percent tariff, costing U.S. consumers and businesses roughly $4 billion annually.

The legal and political consequences of President Trump’s trade war with Canada should also be considered. The move to outright ban nearly $1 billion in imports due to a trade dispute is an unprecedented move and marks the first use of such authority by this Trump Administration. To be sure, prohibitions on imports exist, including those on goods made with forced labor as well as those on sanctioned countries such as North Korea or Iran. Congress also has a history of imposing import bans such as the Non-Importation Act of 1806 or passing legislation forbidding the importation of opium in 1887. Unfortunately for the Trump Administration, these are entirely different precedents that would not apply regarding the use of Section 338 to institute a ban on a top U.S. trade partner. The Shipment warned about these trade authorities back in July, noting that if Section 338 is left unchecked by Congress or the courts it would grant the president the ability to follow through on threats to cut off trade and impose “secondary tariffs.” In terms of politics, Canada’s retaliatory tariffs heavily impact exports from Texas, Michigan, and Ohio – three states that have close Senate races in the upcoming U.S. midterm elections. The longer the trade war lasts into the fall season, the more swing states will notice the impact.

Looking Ahead: Despite the economic consequences for U.S. businesses and consumers, the trade war seems to be heating up rather than showing any signs of cooling down. The Shipment remains hopeful that an economic truce could be reached by the time of the U.S.-China summit later in September – a timetable consistent with speculation that it could take “weeks” for both sides to come to the table. On the other hand, the U.S.-China summit could result in assurances of U.S. access to critical minerals or provides President Trump some sort of “deal” that can be touted as a great success. This could reduce the incentive for the Trump trade team to make amends with their Canadian counterparts – potentially lengthening the trade war for months.

In Other News

Remember Metal Prices: In December 2025, the Shipment covered the rising price of precious metals such as silver and gold, and in early 2026 discussed how this trend also began to impact copper. After silver reached an all-time high of over $120 an ounce and gold reached over $5,500 an ounce in January, these metals experienced a pullback of about 45 percent and 20 percent, respectively. In contrast, copper has maintained its momentum and risen nearly 25 percent in 2026, hitting a new all-time high this week. This is due to several factors. First, the global mine production of copper has fallen 1.1 percent in the first half of 2026, driven by concentrate production in Indonesia falling 32 percent, and Chilean mine production dropping close to 7 percent. Additionally, there have been supply constraints and a general drawdown in stockpiles due to U.S. copper tariffs, with large amounts of refined copper going to the U.S. market. Second, demand for copper has been increasing as a result of the global data center buildout, the growing use of clean technologies, greater demand for semiconductor components, and higher manufacturing demand in China. This general increase in the demand for raw and refined copper is expected to continue going forward, potentially exacerbating the supply-demand gap, which analysts predict will reach 10 million metric tons by 2040. Finally, recent speculation that U.S. copper tariffs might expand to encompass refined copper or finished copper imports has boosted copper prices further. If the White House decides to tariff additional copper products it would undoubtedly lead to new all-time highs – unwelcome news for the U.S. tech industry.

Other Important U.S.-Canada Trade News: In addition to Canada’s retaliatory tariffs and the Section 338 tariff modifications, President Trump stated in a Truth Social post that Canadian-origin products would be removed from federal government procurement programs and contracts. According to the post, these contracts amount to $50 billion annually for Canadian companies. This comes at the same time the president issued a threat against the Canadian aircraft manufacturer Bombardier that it would not be allowed to sell in the United States unless it manufactures within U.S. borders. Bombardier does maintain a U.S. manufacturing presence and recently stated that its supply chain includes 2,800 U.S. companies with thousands of employees across 20 states. Additionally, the Japanese brewing company Sapporo has announced that it will be moving some of its beer production from Canada to the United States amidst the current trade war. This is a move to mitigate uncertainty surrounding tariff costs as the U.S. market is its most important one outside Japan.

The Trump Stimmie Check: Last night President Trump promised $5,000 “dividend” checks to every adult in the country if Republicans win the midterm elections. With around 270 million U.S. adults as of 2026, this proposal would constitute an economic stimulus package of over $1.3 trillion. For perspective, this would surpass by over $400 billion the direct payments to Americans during the entirety of the COVID-19 pandemic ($931 billion in direct payments to individuals) (around $200 billion more if adjusted for inflation). Note that tariff revenue alone could not fund this stimulus package, as it would take roughly a decade’s worth of tariffs at current levels to pay for such a proposal. In the meantime, enthusiasts of such a dividend can wait to receive the $2,000 tariff check promised in July, 2025.

U.S. Section 338 Actions Against Canada Over Time

Source: The White House, The United States International Trade Commission, Shipment Analysis