Canada Imposes Retaliatory Tariffs After Trump Taxes $20 Billion Goods

The United States and Canada have entered a significant trade dispute following the collapse of negotiations in late August 2026. Donald Trump imposed a 50% tariff on approximately $20 billion of Canadian goods under the Tariff Act of 1930, which included a 25% tariff on cars and auto parts.

In response, Prime Minister Mark Carney announced retaliatory tariffs on nearly 900 American products, effective September 8. These measures include a 25% duty on U.S. toilet paper and facial tissue, and a 50% duty on napkins, paper towels, raw wood pulp, and most dairy products. To support domestic industry, the Canadian government announced a C$7.5 billion relief package for affected small and medium businesses.

The dispute has immediate implications for U.S. supply chains and consumer prices, as Canada is the largest supplier of toilet paper to the U.S. and a critical provider of raw wood pulp for American mills. Procter & Gamble has already begun raising prices, and research from the Federal Reserve indicates that these tariffs are passing fully to consumers.