The latest escalation in the US–Canada trade dispute has brought new tariffs on vehicles, construction materials and household goods, raising the prospect of higher prices on both sides of the border. President Donald Trump has threatened to increase US tariffs on Canadian cars, trucks and parts from 25% to 50% in 2027, while Prime Minister Mark Carney has retaliated with tariffs on selected American imports. The measures matter because the two countries’ supply chains are closely integrated, particularly in carmaking and housebuilding.

Higher US vehicle tariffs could increasingly be passed on to buyers as dealerships’ ability to absorb costs weakens, potentially increasing prices for new and used cars. Canada has matched US tariffs on steel and aluminium at 50% and imposed duties on American wood products and household items such as appliances, furniture and cutlery; these could raise building costs but may also encourage Canadians to buy domestic alternatives. In 2024, the US imported $23bn worth of wood products, nearly half from Canada, underlining the scale of the trade relationship.