The economic tug-of-war between Canada and the United States continues to complicate an already strained trading relationship, with Ottawa maintaining that most retaliatory tariffs against American goods remain firmly in place—contradicting a recent high-profile economic report.
Industry Minister François-Philippe Champagne directly challenged findings from Oxford Economics that suggested Canada had quietly rolled back most of its counter-tariffs on American products. The report, which has circulated widely among policy circles in recent weeks, claimed Canada had removed duties on roughly $8.4 billion worth of U.S. imports, representing about 83% of the total value initially targeted.
“That’s not accurate,” Champagne told reporters following a cabinet meeting Tuesday. “We have maintained our countermeasures.” His statement marks an unusual public correction of a respected economic research firm whose reports frequently inform both government policy and private sector investment decisions.
The confusion stems from Canada’s response to the Trump-era tariffs on Canadian steel and aluminum, which were imposed in 2018 under the controversial justification of “national security concerns”—a move that sent shockwaves through North American supply chains and left many Canadian manufacturers scrambling to adjust their business models.
Ottawa responded with dollar-for-dollar retaliatory tariffs on American products ranging from steel and aluminum to consumer goods like playing cards, maple syrup, and even toilet paper. The total package targeted roughly $16.6 billion in U.S. exports to Canada.
When President Biden took office, many expected a swift normalization of trade relations. Instead, what followed was a complex chess game of partial removals and modifications. In 2019, Canada and the U.S. reached an agreement to lift some tariffs, leading to the suspension of certain countermeasures.
But the trading relationship has remained far from smooth. The Biden administration introduced a new round of duties on Canadian softwood lumber—a perennial trade irritant—and maintained other trade barriers that have frustrated Canadian exporters.
Mary Anderson, trade policy director at the Canadian Chamber of Commerce, explains the current landscape: “We’re dealing with a patchwork of tariff suspensions and removals that’s extraordinarily difficult for businesses to navigate. Companies that were finally adjusting to the post-CUSMA environment now face this added layer of uncertainty.”
The contradiction between Oxford Economics’ assessment and the Canadian government’s position highlights the opacity that often surrounds trade negotiations. While some measures may have been temporarily suspended or modified, the legal framework for reimposing them remains intact—a crucial distinction that gives Ottawa leverage in ongoing negotiations.
Economic data shows the real-world impact of these trade frictions. Statistics Canada reported that Canadian exports to the U.S. grew by just 2.3% in the last quarter, significantly below the 5-year pre-pandemic average of 3.7% quarterly growth. Meanwhile, sectors directly impacted by tariffs—particularly aluminum processing and specialized steel manufacturing—have seen investment decisions delayed or canceled altogether.
Paul Samson, former Assistant Deputy Minister at Global Affairs Canada, notes that the situation reflects a fundamental shift in how Canada approaches trade relations with its largest partner. “The era of taking U.S. market access for granted is over,” Samson told me in a phone interview. “What we’re seeing is a more assertive Canadian position that recognizes the need for credible deterrents against future protectionist measures.”
For Canadian businesses caught in the crossfire, the conflicting narratives create additional hurdles. “We’re hearing from members who simply don’t know whether to factor these tariffs into their long-term planning,” says Brigitte Robichaud, who heads a manufacturing industry association in Quebec. “If Oxford Economics—with their research capabilities—can’t get clarity on what tariffs are actually in effect, imagine the challenge for a medium-sized exporter.”
The dispute also raises questions about information transparency in international trade. While tariff schedules are technically public information, the practical reality of tracking suspensions, modifications, and exceptions creates an information asymmetry that typically favors larger corporations with dedicated trade compliance departments.
Both countries have strong incentives to downplay trade tensions. Canada relies on the U.S. market for roughly 75% of its exports, while integrated supply chains mean disruptions quickly cascade across borders in both directions. Just-in-time manufacturing processes, particularly in the automotive sector, leave little room for customs delays or unexpected duty payments.
As negotiations continue behind closed doors, the contradiction between Oxford Economics’ assessment and Champagne’s assertion serves as a reminder that trade relationships—even between the world’s closest trading partners—remain subject to political calculus and strategic posturing.
For now, Canadian exporters would be wise to proceed with caution, operating under the assumption that most countermeasures remain in place until definitively proven otherwise. The costs of assuming tariffs have been removed, only to face unexpected duties at the border, far outweigh the competitive advantage of slightly lower prices.
As one trade consultant who advises companies on both sides of the border put it: “In this environment, surprises almost always cost money. Better to overestimate tariff exposure than find yourself explaining to shareholders why quarterly profits missed projections.”
While the immediate economic impact of this particular disagreement may be limited, it underscores a deeper truth about Canada-U.S. relations in 2024: the days of taking continental economic integration for granted have given way to a more cautious, verification-based approach that recognizes the potential for sudden policy shifts, regardless of which administration holds power in Washington.
