U.S. President Donald Trump this week continued to single out Canada as a bad trading partner, claiming in a social media post that his northern neighbour is a “tariff abuser†that charges high rates on American goods.
The vast majority of U.S. products are not subject to any tariffs under the terms of the North American free trade pact signed by the president during his first term, though recent events have muddied those waters somewhat.
"Ninety-eight or 97 per cent of goods that come into Canada flow in tariff-free," said Clifford Sosnow, who heads the Fasken law firm’s international trade and investment group, referring to the pre-Trump state of affairs.
Dairy and poultry products as well as eggs do face steep tariffs once those imports reach a certain quantity under Canada’s supply management system. The so-called tariff-rate quotas put a limit on the amount of a particular good that can be imported before a higher rate applies.
For example, Canada places a tariff of 7.5 per cent on many milk and cream products if they are "within access commitment," meaning the items do not exceed an agreed-upon cap, according to the federal customs tariff schedule.
If an importer wants to go over that threshold, they face a tariff of between 241 per cent and nearly 300 per cent.
In posts on Truth Social this week, Trump called out the hefty levies on some farm goods, writing Tuesday that "Canada must immediately drop their Anti-American Farmer Tariff of 250 per cent to 390 per cent on various U.S. dairy products, which has long been considered outrageous."
The basis of the 390 per cent figure — a false claim — is unclear. The steepest food tariff, which applies to some milk-based fats and oils, tops out at 313.5 per cent, according to the federal government's tariff schedule.
"It's a highly inaccurate description of the situation. It gives the reader the sense there's this immediate wall where dairy product can't come into Canada. And that's not true. It can come into Canada at a significant amount that's tariff-free," said Sosnow.
The U.S. also has its own tariff-rate quotas in place on commodities such as sugar, he noted.
"The president doesn't mention that."
Traditionally, an administration unsatisfied with a free trade deal might negotiate for a better one, as Trump did with the Canada-United States-Mexico Agreement (CUSMA, also known as USMCA) signed in 2018. That deal replaced the North American Free Trade Agreement, which had been in place since the 1990s and had in turn updated the U.S.-Canada Free Trade Agreement and its predecessor, the auto pact.
Dispute settlement processes baked into the CUSMA deal also allow for trade-rule tweaks. In 2023, a panel of experts ruled in Canada's favour after American dairy farmers argued that its system of low-tariff dairy import permits blocks full access to the 3.5 per cent share of the Canadian market they thought they'd been granted under the revised pact.
Framing Canada as an abusive trading partner warps the nature of the two countries' long history of rules-based commerce and friendly relations, experts said.
"The current USMCA, or CUSMA in Canada, was negotiated by President Trump during his first term. The Canadian government made a number of concessions," noted Cedric Gomes, president of North Border Trade Consulting.
"This is a fair agreement that all sides, including Mexico, have agreed to. And if there needs to be a change in that agreement, the place to do that is at the board table rather than implementing these tariffs and starting a tariff war."
Last week, Canada imposed a 25 per cent tariff on $30 billion worth of American goods ranging from melons to motorcycles in response to the Trump administration's sweeping tariffs on Canadian imports on March 4, many of which where then pushed back two days later until April 2.
For some, the damage was already done.
"I have clients that for those two days were dinged $100,000," said customs broker Lisa McEwan, referring to a restaurant equipment maker whose shipment crossed into the U.S. during the brief window when U.S. tariffs applied to virtually all Canadian imports.
Starting Thursday, the Canadian government plans to impose tariffs of 25 per cent on another $29.8 billion worth of American goods in retaliation for Trump's 25 per cent steel and aluminum tariffs — on all countries — that took effect Wednesday.
Imports from the United States are also subject to Canada’s five per cent goods and services tax, while Canadian products face no such premium when they cross into the U.S. But that federal tax is meant to ensure American items don't enjoy an edge over those made in Canada, which are likewise subject to GST.
Importers of American goods into Canada — based here or stateside — can recover that GST by registering with the Canada Revenue Agency and filing corporate taxes.
Large importers typically do just that, but many smaller players abroad hold off, trade experts say.
“Unless they’re importing millions of dollars, a lot of them just find it a waste of time, or try and pass it on to their clients or mitigate it in other ways to not have to file taxes in a foreign country," said McEwan.
This report by °µÍø½ûÇø was first published March 12, 2025.
Note to readers:This story has been clarified. A previous version noted imports are subject to GST without mentioning that U.S. and Canadian importers can apply for a tax credit.
