The United States went ahead early this morning with a decision banning nearly US$1 billion worth of Canadian imports, including alcoholic beverages, dairy products and motorcycles.

The ban amounts to barely a ripple in US$880 billion worth of a two-way annual trade between the two northern neighbours, but it marks another ratcheting up of American President Donald Trump’s second-term trade war with America’s longtime ally and trading partner. This will further pull apart U.S.-Canada relations, already tense and with this latest move more than likely to deteriorate even further.

Also banned are some dairy products, including milk by-products. The two countries have long clashed over Canada’s attempts to protect its dairy industry from foreign competition by imposing hefty tariffs once dairy imports have exceeded a quota. 

The ban also covers motorcycles. Bombardier Recreational Products (BRP) in Quebec confirmed that its three-wheel Can-Am Spyder and Canyon motorcycles “will be excluded from importation into the U.S. but BRP assesses that the impact likely won’t be felt until next year because it has completed most production and shipments for the current season.

Experts give their assessment

The import ban “certainly won’t do anything to help the trade tensions between the United States and Canada,’’ explains trade attorney, Patrick Childress, a partner at Holland & Knight and a former U.S. trade official. The latest sparring began over the summer when Trump reached back to a Great Depression law to impose 50% tariffs on about US$20 billion worth of Canadian imports, charging that Canada discriminates against U.S. dairy, auto and alcoholic beverage producers.

Canada promptly counter-punched with tariffs of 15%, 25% or 50%, matching U.S. imports dollar for dollar. To punish Canada for retaliating against his tariffs, Trump decided to ban a list of Canadian products, effective 12:01 a.m. Eastern time today.

The economic impact is likely to be minimal.

However, Childress notes that the products on the banned list were already facing Trump’s tariffs. “For a lot of these goods, the 50% was already acting as a de facto ban by making importation from Canada into the United States uneconomical,″ he reasons.

For his part, Jacob Jensen, director of trade policy at the centre-right American Action Forum think tank, calculates that the ban would cover US$967 million worth of Canadian imports, based on 2025 numbers. Of that, 87% would be alcoholic beverages that the U.S. targeted because of some Canadian provinces responded to Trump’s provocations by banning U.S. booze from store shelves.

Escalation in the trade war

“This marks yet another escalation in the trade war that may result in further retaliation on the Canadian side,” Jensen argues, expecting Canadian exporters and U.S. importers “impacted by these bans will be highly motivated’’ to demand that trade officials on both sides find some way to reach a “resolution of this whole ordeal.’ 

The impasse imperils efforts to renew the U.S.-Mexico-Canada Agreement, a North American trade pact Trump pressured America’s neighbours into accepting in his first term and which he once declared “the most modern, up-to-date, and balanced trade agreement in the history of our country.’’ The deal allowed most goods to cross North American borders duty-free.

But since returning to the White House last year, Trump has announced a series of tariffs that have clouded the future of trade in the region. He has directed most of his ire at Canada and is openly seeking to pull Canadian manufacturing south. This has inflamed public opinion in Canada by repeatedly suggesting that the country become America’s 51st state.

Canadian Prime Minister Mark Carney came to power last year on a promise to stand up to Trump. Carney has also embraced the prospect of Canada becoming the European Union’s first associate member. He reported that last week’s trade negotiations with India are making “good progress” and that the two countries are aiming to conclude talks by the G20 summit in mid-December.

Carney also broke with the U.S. earlier this year, striking a deal with China to allow a limited number of Chinese electric vehicles into Canada at a sharply reduced tariff in exchange for China lowering tariffs on Canadian canola.