What did Canada tariff before the trade war with the U.S.?

Alexandra Mae Jones · CBC News

· Posted: Mar 18, 2025 4:00 AM EDT | Last Updated: 10 minutes ago

Since U.S. President Donald Trump archetypal threatened to spot monolithic tariffs connected Canadian goods, the country has been embroiled successful a whirlwind backmost and distant with its biggest trading partner.

Against this backdrop, China has slapped new tariffs connected definite Canadian goods, and astatine slightest 1 different long-standing commercialized squabble has been pushed backmost into the spotlight.

Here's a speedy look astatine however tariffs are acceptable nether mean circumstances, wherefore immoderate of them (under definite conditions) tin skyrocket, and why New Zealand is unhappy. 

How bash Canada's tariffs work?

Tariffs are governed by the Customs Tariff Act, which sets a wide complaint of 35 per cent for goods entering Canada. This whitethorn look high, but this baseline complaint is astir ne'er used. 

This is due to the fact that Canada, on with much than 160 different countries, is portion of the World Trade Organization (WTO), and each WTO members have "Most-Favoured-Nation" (MFN) presumption erstwhile trading with each other.

All of Canada's cardinal trading partners are WTO members and they wage little MFN rates — which alteration from merchandise to product.  The complaint tin beryllium adjacent little if the 2 countries person their ain commercialized agreement.

"Whether it's multilateral oregon bilateral with different WTO members, you're allowed to trim that MFN tariff to thing lower, either a little work tariff oregon a nary work tariff," said Martha Harrison, an planetary commercialized lawyer.

For example, the MFN complaint for definite railroad axles is 9.5 per cent, but Australia and New Zealand wage conscionable 2 per cent, due to the fact that of abstracted agreements. 

Under the Canada-United States-Mexico Agreement (CUSMA), 98 per cent of goods entering Canada from the U.S. person nary tariffs – oregon astatine least, they didn't earlier the commercialized war. 

Many goods tin participate Canada tariff-free nether MFN status, but Canada places higher default tariffs connected immoderate products. Our MFN complaint for covering products averages astir 18 per cent, which is partially to assistance home producers vie fairly, but besides successful the hope of lowering the fig of products made nether mediocre labour conditions entering Canadian markets, Harrison says. 

But erstwhile it comes to the dairy industry, tariffs get a small much complicated.

What astir dairy?

Canada uses "supply management" policies for definite cultivation products to power prices, maintain nutrient information standards and support the dairy, ovum and poultry industries from overseas contention — policies which person agelong irritated commercialized partners specified arsenic the U.S. and New Zealand, different large dairy producer. 

The policies purpose to bounds however overmuch of each product — butter, cheese, crystal cream, eggs, etc. — tin beryllium imported. Importers apply for a percent of the quota, and are capable to bring successful that quantity with nary tariffs.

WATCH | Why Trump dislikes dairy management:

Trump has claimed Canada is "ripping [the U.S.] off" by putting tariffs of implicit 200 per cent connected dairy products. 

But those tariffs lone footwear successful aft the U.S. surpasses the quantity it's permitted to merchantability successful Canada tariff-free – a fig negotiated by the Trump medication successful 2018 arsenic portion of CUSMA.

"Unless oregon until you conscionable that threshold, you bash not pay," Harrison said, noting that the U.S. has ne'er reached the quota, which the U.S. dairy manufacture acknowledged earlier this month.

During the dialog of CUSMA, Canada agreed to summation implicit clip the quota of U.S. products that tin participate the marketplace tariff free. 

New Zealand formally challenged this strategy successful 2022, saying Canada wasn't holding up its commitments nether the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The quality is ongoing. 

Why is China upset?

In October, Canada enactment a 25 per cent surtax connected alloy and aluminum products from China, and 100 per cent connected Chinese-made electrical vehicles (EVs), claiming unfair competition. Tariffs are often collected successful the signifier of a surtax, which are further taxes connected apical of existing rates. 

China responded with retaliatory tariffs connected Canadian cultivation and nutrient products, including canola lipid and peas. 

The U.S. had earlier that year raised tariffs connected a scope of products from China, including alloy and aluminum — an illustration of however intimately aligned Ottawa and Washington's commercialized goals were conscionable past year. 

"It's not uncommon for Canada to travel successful our cardinal trading partner's footsteps relating to commercialized policy," Harrison said. "It makes consciousness from a North American system perspective."

The destabilizing of this humanities relationship, enshrined successful CUSMA, is "especially troubling," she added. 

"Our astir important trading spouse appears to beryllium little aligned with Canada's absorption connected planetary commercialized and with Canada's presumption wrong the CUSMA arrangement."