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Canada's Counter-Tariffs Take Effect As Trump Targets Bombardier And Midterm Battlegrounds

Zero Rss
1 month ago
Canada's Counter-Tariffs Take Effect As Trump Targets Bombardier And Midterm Battlegrounds

Canada's retaliatory tariffs on U.S. goods took effect at 12:01 a.m. Tuesday - raising duties of 15%, 25%, and 50% on hundreds of American products after last month's collapse of bilateral talks. Ottawa says the package matches the United States "dollar for dollar, rate for rate." Finance Canada values the covered U.S. imports at $27.6 billion; some U.S. accounts put the figure nearer $20 billion. Either way, it is a small share of total two-way trade - and a large share of the political risk.

GEOFF ROBINS/AFP/Getty Images

The list is drawn from goods already hit by U.S. Section 338 and Section 232 tariffs. Section 338, a long-dormant provision of the Tariff Act of 1930, had not previously been used by a president to impose duties; Trump invoked it in July to levy 50% on selected Canadian goods after talks failed, and those U.S. duties took effect August 22. Canada's matching rates now apply as follows: 50% on most steel and aluminum products (up from an earlier 25% Canadian counter-duty), plus furniture and clothing; 25% on appliances, dairy including cheese, and some metal derivatives; 15% on selected electronics, tools, and machinery. Goods already in transit when the rules took effect are exempt. The surtaxes apply to U.S.-origin goods under Canadian marking rules, not merely to shipments that happen to cross the border.

Seafood and fish were on Ottawa's original list at 25% but were pulled on August 27 after warnings from Canada's Atlantic processors and Maine's lobster industry. About half of Maine's fall catch is processed in New Brunswick; a tariff on those lobsters would have hit both sides. Finance Canada called the change "select adjustments... based on feedback" while adding other items, including copper wire and charcoal, to keep the dollar-for-dollar total. Sen. Susan Collins (R-ME) applauded the retreat - evidence that the targeting was political, and that it can be walked back when the politics cut the wrong way.

Prime Minister Mark Carney has framed the response as measured but non-negotiable. Canadian officials have described the country as under economic assault and have pledged not to match every rhetorical escalation. The practical strategy is twofold: impose a politically targeted list at home, and shop for other markets abroad.

Why Michigan and Ohio matter more than the headline total

Heading into November midterms, Canada's new tariffs are designed to land in states that do a high volume of business with Canada, and which have competitive races. Ohio shipped the largest dollar volume of newly covered goods. Michigan, Indiana, Pennsylvania, and Wisconsin follow close behind. Michigan sends roughly a third of its merchandise exports to Canada; auto parts often cross the Detroit-Windsor corridor more than once before a vehicle is finished. The new Gordie Howe International Bridge was meant to ease that flow. It now sits at the center of a fight over who pays the tariff.

Those same industrial states host competitive House and Senate races. Michigan's Senate contest between Republican Mike Rogers and Democrat Abdul El-Sayed is one of several Great Lakes races that will test whether tariff costs show up at the ballot box; it is not the only possible pivot for Senate control. Ohio's Republican-held Senate seat is also in play. Canadian ministers have said openly that the product list was chosen to concentrate pressure where U.S. politics would feel it. Industry Minister Mélanie Joly, at the August announcement, said Canada was "targeting products that will target states in the U.S." and added: "we're being wise and strategic to put political pressure. And that's why we think it's the right thing to do right now."

Trade groups on both sides warn that the first-round dollar amounts understate the damage. Integrated supply chains mean a duty on steel, parts, or appliances shows up as higher costs for factories and households on both sides of the border. Brad Wood, senior director for trade and innovation at the National Foreign Trade Council, called the cycle "bad for Canadian businesses and consumers, and bad for American businesses and consumers," and said each new layer is another barrier the two governments will eventually have to unwind.

Trump's next pressure points: autos, Bombardier, and Lake America

Washington has not treated Canada's move as the last word. President Trump has already threatened higher auto tariffs in 2027 and, last week, floated cutting off bilateral trade altogether. On Sunday he attacked what he called Canada's "dollar imbalance."

Hours before the Canadian tariffs took effect, Trump turned to Bombardier. In a Truth Social post he declared "NO MORE SELLING BOMBARDIER IN THE UNITED STATES," called the company's products "not good enough," and said that if it wants the U.S. market it "must build here." He closed with a list of commands: buy American, fly American airliners, drink American liquor, and "SAIL ON LAKE AMERICA."

Bombardier did not answer the president by name. It noted that aerospace is a major U.S. export industry, that it builds wings and other components in California and Texas, and that it supports tens of thousands of American jobs through plants and a supply chain spanning dozens of states. About 55% of its 2025 revenue came from U.S. customers. The White House has not said how a sales ban would be enforced on aircraft already certified by the FAA.

The Bombardier fight is not new. Trump threatened decertification and a 50% aircraft tariff earlier this year over Gulfstream certification in Canada. Ottawa later certified several Gulfstream models. In 2018 a first-term Commerce Department case against Bombardier airliners produced a huge preliminary duty that the U.S. International Trade Commission later rejected.

Trump has also rewritten the map. On August 27 he signed an executive order directing the Interior Department to update geographic systems immediately from Lake Ontario to Lake America; Great Lakes placards went up in the Oval Office. 

Carney hit back, saying "We know that America is changing. Their trading relationships, their foreign policies, their national monuments, their hydronyms. Canadians also know that naming reality means calling it Lake Ontario - then, now and always."

Supreme Tariff Tiff

Canada aside - on February 20, the Supreme Court ruled 6-3 that Trump could not use the International Emergency Economic Powers Act (IEEPA) to impose his sweeping "reciprocal" and emergency tariffs. Chief Justice John Roberts wrote that IEEPA contains no reference to tariffs and that no prior president had read such a power into the statute. Section 232 metal tariffs were left standing. The administration has since rebuilt parts of the program under other authorities, including Section 338 for Canada and a forthcoming roster of duties against other countries accused of "excess capacity" and persistent surpluses with the United States. Trump has also threatened to block trade with countries that export more to the United States than they import. A consumer-price report due this week will test how much earlier tariff rounds have already fed inflation.

Ottawa's hedge: Europe, and a quiet channel to Beijing

Carney will attend Ursula von der Leyen's State of the Union address in Strasbourg on September 16 and speak to the European Parliament on September 17 - the first foreign head of government invited into that ritual. He has said Canada will open "intense discussions" this fall on a deeper economic and security partnership with the EU, already its second-largest trading partner under CETA.

In parallel, Canadian and Chinese defence officials held a coordination dialogue on September 4, the first such formal talks in more than eight years. Beijing announced the meeting; Ottawa later confirmed working-level military-to-military contact. The optics - reopening a channel closed after the 2018 detentions of two Canadians, while NATO and EU ties remain the stated priority - have already drawn criticism at home.

The immediate economic hit from Tuesday's list is limited by design. The larger question is whether a two-month window before U.S. midterms produces a deal or another round.

Tyler Durden Tue, 09/08/2026 - 10:30
Tyler Durden

More - And Less - Of The Same Things

Zero Rss
1 month ago
More - And Less - Of The Same Things

By Michael Every of Rabobank

It’s more of the same to start this Tuesday, and less too: and that isn’t good news.

Japanese Q2 GDP came in at 0.4% q-o-q, 1.3% y-o-y at the second read, backing the BOJ hiking rates again on September 18 – but is it really going to be ‘one and done’? The 2-year JGB yield is at 1.84% today, close to a new multi-decade high, and vs. the more usual 0% seen for years, while the 10-year is at 2.91%, off recent highs.

Alongside suspicions of further FX market intervention, USD/JPY swung from 154.37 to 153.21, with market chatter of a test of 152 next: recall it was at 160.35 at the start of the month. That’s quite the volatility shock for some books and for those who thought the Yen Carry trade was going to stay one way even after the recent warning from Bessent. Finance Minister Katayama said she will maintain an orderly currency market: but following whose order(s)?

The US and Canada return from a long weekend to a trade war. Trump is threatening to ban US sales of Bombardier’s Canadian-built jets unless production moves south of the border; Canada is set to impose counter tariffs. Showing the direction of travel, the press announced Canada had resumed defense talks with China after an eight-year hiatus, which as one Korean paper puts it, “reflects [an] effort to diversify partnerships amid strained US relations and defence procurement shifts.” How would that work with NATO and the EU unless the latter is dominated by a Germany run by the pro-Beijing AfD? The symbolism, and stakes, matter far more than that benign action, but as the FT argues, Canada “is fated” to keep trying to strike a better deal with the US.

Oil is close to $100 as the Financial Times quotes traders that attacks on shipping and eroding inventories mean “something has to break” soon, and Qatar warned of an “industrial catastrophe” if this crisis continues – and in logistics, things can go non-linear. US diesel is already at a record high, and the Middle East press reports bunker fuel for ships is running out in some places. Tellingly, Japanese shipping companies are considering a return to sails and kites to cut fuel consumption. That fits given Letters of Marque are a thing again now.

Meanwhile, the Houthis struck Saudi Aramco facilities; the UN envoy warned of a wider conflict in Yemen; Israel hit Hezbollah after ceasefire violations; the IAEA’s Grossi said the inspecting body is “completely blind” on Iran’s nuke program; and Iran floated a Hormuz exclusion zone with Oman “in days”, as the Wall Street Journal claims its oil dollars are gone, plunging it “into crisis – and pushing it to escalate. Markets are starting to accept that disruption is going to linger well into 2027. The question is how much worse things could get as well as better.

In Russia, Trump’s peace envoys reportedly found that Putin was still unwilling to compromise on Ukraine, which is little surprise, despite their official statement that there was “movement” towards three-way talks, as Zelenskyy stated the US wants to explore Russia-Ukraine winter de-escalation steps – like stopping attacks on oil refineries(?) That’s as the EU is urging the UK, Canada, Japan, and Norway to “step up to the plate” on funding Ukraine as Kyiv faces a $27bn budget gap in 2026, as it puts €200m into Greenland to try to counter Trump’s approach - but protecting that territory from all interested parties will take many multiples of that sum annually. For its part, Russia just opened a road to North Korea border, showing how they are working more closely together.

In geoeconomics, China's Huawei goes to trial in the US over sanctions and trade secrets eight years after the first allegations were made against it, as Brussels floated an EU ‘anti-China’ procurement rule where national capitals would be urged (is urging a rule?) to reduce their “strategic dependence” on Beijing when issuing public contracts. At the same time, Germany is reportedly worried that France’s Palantir rival risks creating a new dependency for it – on Paris.

Chinese export growth was a staggering 25% y-o-y in US dollar terms while imports were up 28.2%. The trade surplus rose again to a new record high of CNY809.3bn, up 11.9% y-o-y. We will have to wait to parse the detailed China-EU trade numbers ahead of the looming European decision on whether to start Trump-style trade protections vs. Beijing.

On top of all that, Trump posted a slew of messages, including: the ‘moon is ours’, meaning American; of himself in a spaceship; and of what claim to be proposed designs of a new Space Force uniform based on those from the 1997 movie ‘Starship Troopers’...

pic.twitter.com/uYM6I1IBTD

— Rapid Response 47 (@RapidResponse47) September 6, 2026

... which were based on those of the Wehrmacht, SS, and Gestapo as a more-is-more satire: the new look certainly smacks of Grand Moff Tarkin as much as Grand Macro Strategy.

Tyler Durden Tue, 09/08/2026 - 09:50
Tyler Durden

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