Prime Minister Mark Carney has been repeating a reassuring message to Canadians: most trade with the United States is still rolling along, untouched by the escalating tariff war. But as the numbers climb and the impact deepens, that claim is sounding less and less convincing to those caught in the crossfire—especially small business owners and workers in affected industries.
On the night of August 8, 2025, the U.S. imposed a staggering 35.19% duty on Canadian softwood lumber, a move that British Columbia’s Forestry Minister Ravi Parmar quickly denounced as “absurd and reckless,” according to reports from Canadian outlets. This is just the latest in a series of tariff hikes since Carney’s Liberal government took office—a period marked by rising trade tensions, missed deadlines, and shifting political rhetoric.
To appreciate the scale of the blow, consider where things stood just a year ago. Under the Biden administration, duties on softwood lumber had already jumped from 8.05% to 14.54%. The Trump administration, now back in power, ratcheted those tariffs up to 20.56% before the latest hike. For Canada’s lumber industry, which has long relied on stable access to the U.S. market, the cumulative effect is nothing short of punishing.
And softwood lumber isn’t alone. Since Carney’s election, tariffs on steel and aluminum have doubled from 25% to 50%. Copper now faces a 50% tariff. Any automotive-related exports that don’t meet the Canada-U.S.-Mexico Agreement (CUSMA) requirements are hit with a 50% levy, while general exports not covered by CUSMA get slapped with a 35% tariff—just like softwood lumber. These are not minor adjustments; they’re seismic shifts for Canadian exporters, many of whom are now scrambling to adapt or facing grim prospects.
Yet, Carney’s public stance has evolved dramatically. During his campaign, he warned that Trump’s tariffs posed an existential threat to Canada, painting the U.S. president as an aggressor bent on undermining the country’s economy. “I know the President, I’ve dealt with the President in the past in my previous roles when he was in his first term, and I know how to negotiate,” Carney said during the Liberal leadership race. But now, as negotiations have stalled and the American side has stopped returning calls, Carney’s message has shifted to, “no deal is better than a bad deal.”
When pressed by reporters in Trenton, Ontario, on August 8, Carney offered a new refrain: “We’re in a situation right now where 85% of our trade with the United States is tariff-free.” On the surface, that sounds reassuring. But as CBC and policy experts have pointed out, that figure only describes the potential for exemption under CUSMA—not the reality facing most exporters.
U.S. Census Bureau data from 2024 shows that only about 38% of U.S. imports from Canada actually traded under CUSMA provisions. An analysis by the Yale Budget Lab, published on August 7, 2025, assumed that perhaps 50% of Canadian exports to the U.S. are now CUSMA-certified. The remaining half? They’re paying the new, higher tariffs, or struggling to navigate the complex certification process.
For small business owners like Steve Mallia, who runs Starfield Optics in Toronto with his wife Natalie, the stakes are personal and immediate. Mallia told CBC that before Trump’s tariff threats earlier this year, registering for CUSMA benefits “wasn’t a priority.” But when U.S. orders dried up “literally overnight,” he realized he had to act. The process, he said, has been daunting: “This is the part that takes up a lot of time and costs money. The last thing I want is to ship something and then, you know, customs gets ahold of [the product] and they go, ‘You know what? He didn’t use the right colour ink.’”
It’s a sentiment echoed by many small exporters. Applying for CUSMA certification can be costly and time-consuming, especially for businesses without large legal or compliance teams. According to a July 2025 report from the Canadian Federation of Independent Business (CFIB), more Canadian exporters have opted to absorb the tariff costs or raise their prices rather than apply for relief through Canada’s remission program, which offers refunds in exceptional circumstances.
Tyler Meredith, a former economic adviser to the Trudeau government and now a partner at a public affairs firm, told CBC that simply citing the “85% tariff-free” figure understates the costs Canadian businesses are facing. “If the consequence is that trade overall falls, as we are seeing now in the data, that’s going to be a cost that we disproportionately bear relative to other countries,” Meredith said. Canada is one of the most trade-dependent nations on the U.S. in the developed world, making it particularly vulnerable to these disruptions.
The missed deadline for a new trade deal—set by Trump for August 1—has only heightened the sense of uncertainty. After Carney’s announcement on June 26 that Canada would proceed with a Digital Services Tax, Trump broke off all talks the very next day. Two days later, Carney canceled the tax, but the damage was done. Since then, the tariff increases have kept coming, and the July jobs report showed a loss of 51,000 full-time positions in Canada.
Carney insists that his government will retaliate “where they have the maximum impact on the United States and minimum impact in Canada,” but the options are limited. Canada is one of the few countries to have responded to Trump’s economic disruption with its own counter-tariffs, but so far, those measures have done little to stem the tide. Meanwhile, Trump has been busy imposing tariffs on dozens of countries, with rates ranging from 10% for the U.K. to 41% for Syria and a staggering 50% for Brazil. He also recently threatened to hit goods imported from India with 50% tariffs over New Delhi’s continued purchases of Russian oil.
Canada remains the second-largest trading partner of the U.S. and its top export market, making the stakes especially high. But as the Americans lose interest in negotiating and other G7 countries secure deals or exemptions, some are beginning to wonder if it’s time for a change in tactics. “It takes two to tango,” observed one columnist, “but when every other G7 country is now covered by a deal and when Mexico has an extension and exemption from further tariffs, maybe it’s time to ask if we are the problem and change tactics.”
For now, Carney’s government is left trying to reassure a nervous public and anxious business community that things aren’t as bad as they seem. But with each new round of tariffs, that message gets harder to sell. As one of Carney’s favorite campaign slogans goes, “a plan beats no plan.” The question now is whether his plan is working—and if not, what comes next.
Canada’s trade war with the U.S. has entered a new, more painful phase. The numbers, and the stories behind them, suggest that for many, the costs are already all too real.