Canada's trade relationship with the United States is changing rapidly. The impacts will extend far beyond the businesses directly facing tariffs. At the same time, Canada's response is increasingly taking on the character of economic mobilization. For Canadian businesses, the question is no longer whether the environment has changed—but how prepared they are for what comes next.

Canada-U.S. trade has entered a fundamentally different chapter.

Following the collapse of recent negotiations, the United States has imposed new 50% tariffs on approximately $20 billion of Canadian goods. Today, Canada announced a new round of retaliatory tariff measures, effective September 8, covering $27.6 billion in imports from the United States.

The new measures will impose tariffs of 15%, 25% and 50% on products drawn from those targeted by the U.S. Section 338 and Section 232 tariffs, with the Canadian rate for each product based on the corresponding U.S. tariff rate. The measures will focus on sectors most affected by U.S. tariffs, including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

Importantly, the counter-tariffs apply only to goods originating in the United States, as determined under Canada's rules for establishing U.S. origin under CUSMA.

In the wake of these measures, it is important to recognize that this is no longer simply a dispute over tariffs.

Prime Minister Mark Carney has described the moment in stark terms: “You're at war when you get attacked. We got attacked.”

That language matters. It signals a shift in how Ottawa is approaching the relationship—and how Canadian businesses should assess the risk.

The federal government's response is increasingly being framed around protecting Canada's economic sovereignty, strengthening domestic resilience, supporting affected workers and businesses, and reducing Canada's vulnerability to economic coercion.

In other words, this is looking less like a conventional trade dispute and more like a protracted economic conflict. For Canadian businesses, that means preparing for a potentially sustained period of disruption.

For Canadian businesses, that should change the way you assess your exposure.

What is actually being tariffed?

The U.S. has imposed the 50% tariffs on a range of Canadian goods under Section 338 of the U.S. Tariff Act of 1930, a rarely used authority that allows the President to impose additional duties in response to what the administration considers discriminatory treatment of U.S. commerce. The breadth of the measures is notable.

One proclamation targets Canadian alcoholic beverages. Another targets dairy products. A third, despite being framed around motor vehicles, covers hundreds of additional product classifications ranging from plywood and other wood products to apparel, cosmetics, furniture, chemicals, electronics, sporting goods, toys and other consumer and industrial products. In total, approximately 550 Harmonized System (HS) codes have been targeted by the U.S. Administration.

Some of the more notable categories include*:

Forestry, wood, paper and pulp-related products: lumber, plywood, particle board, densified wood, wood products and furniture
Agriculture and food: natural honey, seeds, plants, hops, vegetable extracts and baking preparations
Chemicals and chemical inputs
Plastics and manufactured materials
Textiles and apparel: including certain clothing and outdoor garments
Personal care and cosmetics
Furniture and household goods
Machinery and electrical/electronic products
Sporting goods and equipment
Toys and recreational products
Glass and certain jewelry products
Antiques and works of art
A range of other manufactured and consumer products

*Disclaimer: This summary provides a simplified overview of the products potentially affected and is not intended to be legally exhaustive. The applicable tariff treatment is determined by the specific 8-digit HS classifications set out in the relevant annexes, including applicable exclusions and exemptions, such as certain goods already subject to Section 232 measures.

The knock-on effect: if you're not directly affected, don't assume you're protected

The latest U.S. tariffs cover a targeted and economically significant portion of Canada's exports to the United States. But in an economy as deeply integrated with the U.S. as Canada's, trade disruption does not stay neatly contained within a tariff schedule.

A manufacturer loses U.S. orders. Suppliers feel the pressure. Truck and port volumes shift. Supply chains are rerouted. Investment is delayed. Government funding and priorities may shift toward affected sectors or emerging pressures.

The result can reach companies and sectors that never appear on a tariff list—and ultimately, the workers and communities that depend on them.

And uncertainty has its own cost. Businesses may delay capital, reconsider expansion, restructure supply chains or rethink where they invest.

The question is no longer simply whether your product is tariffed. It is how exposed your business—and the ecosystem around it—is to a less predictable North American trading relationship.

That makes this a competitiveness, investment and government-relations issue.

Immediate government relations considerations

For Canadian businesses, government relations can no longer be something you turn to when a policy problem becomes a crisis. It needs to be a part of business risk management.

As governments assess how to respond, support affected industries and protect Canada's competitiveness, businesses have an opportunity—and a responsibility—to ensure decision-makers understand the realities on the ground.

That means moving quickly to:

Assess your exposure—both direct and through customers, suppliers, markets and communities.
Model different scenarios—including what six or 12 months of tariffs could mean for operations, investment and employment.
Identify the consequences that matter to government—jobs, investment, supply chains, infrastructure, regional impacts and Canada's broader economic interests.
Align your business and government-relations strategies so that your asks reflect a credible business case and the outcomes you need.
Engage the right decision-makers early, at the federal, provincial and U.S. levels, before priorities and programs are fully set.
Prepare for multiple scenarios, because today's policy response may not address tomorrow's exposure.

Evolving your business plans alongside your government relations activities will help ensure that government support programs meet your unique circumstances.

Critically important to this is ensuring the right people have the best information as they develop programs to support our economy in the coming months.

This is where the right government-relations strategy can make a difference.

Navigating what comes next

For more than a decade, Compass Rose has helped Canadian businesses and industry associations navigate complex trade, regulatory and parliamentary environments—including some of Canada's most challenging tariff and market-access files.

Our work spans highly regulated sectors including agriculture, natural resources and health sciences, with experience defending critical Canadian industries affected by punitive tariffs and supporting efforts to open new markets for Canadian products.

The Compass Rose team includes former senior government and central-agency officials, bringing first-hand insight into how decisions are made in Ottawa and strong relationships across government. Combined with experience navigating key international capitals, including Washington and London, this provides a useful perspective on the forces shaping Canada's economic and trade environment.

As that environment becomes more uncertain, understanding where a business is exposed—and where and when government engagement can make a difference—will be increasingly important.