Canada and the United States, once lauded for their close economic and cultural ties, are now facing one of their most turbulent periods in decades. The fallout from a series of new tariffs and trade disputes has rippled across industries, from steel and lumber to whisky and tourism, straining businesses and livelihoods on both sides of the border.
At the heart of the tension lies a flurry of sectoral trade negotiations. Canada is urgently pursuing deals with the U.S., particularly for steel, aluminum, and energy, as the threat of plant closures looms large. According to the Financial Times, Canadian Industry Minister Mélanie Joly warned, "If we don't do anything short term for steel, we may lose our plants." The Canadian steel industry, valued at C$15 billion (about $11 billion), supports over 100,000 jobs—making its health a matter of national importance.
Prime Minister Mark Carney and Minister Joly recently visited the White House, seeking to hammer out agreements with U.S. officials. While no concrete deals emerged, both sides agreed to speed up the process, offering a glimmer of hope for industries battered by American tariffs. President Donald Trump, after the meeting, assured that Carney would leave "very happy," but the details remain elusive. The ongoing discussions also cover aluminum and energy, sectors equally vital to Canada’s economic stability.
Yet, the shadow of U.S. protectionism hangs heavy. On October 14, 2025, President Trump’s latest tariffs on imported softwood lumber, furniture, and kitchen cabinets took effect, adding new layers of complexity to an already fraught relationship. The White House described the move as necessary to bolster U.S. industries and protect national security. The new measures include a 10% tariff on softwood lumber, with duties on certain upholstered furniture and kitchen cabinets starting at 25%. These will rise to 30% and 50% respectively by January 1, 2026.
Canada, the top supplier of lumber to the U.S., is particularly hard hit. The 10% lumber tariff stacks atop existing anti-dumping and countervailing duties, recently more than doubled to 35%, bringing the total burden to 45%. The BC Lumber Trade Council called these tariffs "misguided and unnecessary," warning, "This will impose needless strain on the North American market, threaten jobs on both sides of the border, and make it harder to address the housing supply crisis in the United States." The financial impact is tangible: Stephen Brown of Capital Economics estimated that a 10% lumber tariff could raise the cost of building an average American home by $2,200.
The tariffs were imposed under Section 232 of the Trade Expansion Act of 1962, the same authority Trump used earlier this year for steel, aluminum, and auto duties. While Britain, the EU, and Japan have negotiated ceilings on their wood product tariffs, Canada faces the full brunt. The move comes at a time when U.S. homebuyers are already reeling from high mortgage rates and limited inventory, as noted by National Association of Home Builders chairman Buddy Hughes, who urged for deals that "roll back tariffs on building materials."
Meanwhile, the auto industry finds itself caught in the crossfire. The United States-Mexico-Canada Agreement (USMCA) is up for review, and concerns are mounting that U.S. efforts to strengthen its auto sector could come at Canada’s expense. John D'Agnolo, president of Unifor Local 200 representing about 2,000 Ford workers in Windsor, Ontario, cautioned, "If Carney strikes a deal harming the auto industry, the union will strongly oppose it." The North American auto market relies on cross-border cooperation among giants like Ford, General Motors, and Stellantis. Stellantis, for example, recently announced plans to invest about $10 billion in U.S. manufacturing, a bid to shore up its most profitable market.
But the trade turmoil is not confined to heavy industry. Consumer-facing sectors are feeling the sting as well. Gareth Moore, CEO of Virginia Distillery, told CNN that his company’s American single malt whisky sales in Canada "collapsed to zero" in 2025. The reason? Canadian officials banned American spirits from store shelves in many provinces, a direct response to the deteriorating trade relationship and President Trump’s threats, including his suggestion that Canada could become the 51st U.S. state. "We were looking to triple the business. Instead, it collapsed to zero," Moore lamented. "It was almost like suddenly the whisky didn’t taste good because of where it’s from."
The pain is widespread. Jeff Quint, founder and CEO of Cedar Ridge Distillery in Iowa, had shifted focus to Canada after being shut out of Europe by previous trade spats, only to see exports to Canada plunge by 85% in the second quarter of 2025. "You hate to invest in a market for two to three years—and then have to bail out of it," Quint said. He added, "These tariffs create a level of uncertainty that is paralyzing. We just want to know what the rules are. This lengthy period of instability isn’t good for anyone."
Tourism, too, has taken a direct hit. Canadian visitors to the U.S. have dropped sharply, with land crossings down 31% and air travel down 13% through September 2025, according to Statistics Canada. The Bluff Point Golf Resort in Plattsburgh, New York—just 35 minutes from Montreal—typically counts on Canadians for 70% of its daily golfers. This year, owner Paul Dame told CNN, "It’s been a dramatic drop. It’s very rare that we see someone pull in to play golf that’s coming from Canada." The decline has forced the resort to cut staff and hours, a blow Dame described as "nothing we’ve done. We’ve worked hard to grow our business and lure folks who want to come across the border. Canadians just aren’t happy. It’s not economic policy. It’s these hurtful things said about their country."
Even U.S. businesses that rely on Canadian travelers are suffering. Mark Collins, CEO of Clipper Navigation, noted a 30% drop in ferry ridership between Vancouver and Seattle, resulting in a 25% workforce layoff—ironically, mostly U.S. workers. "There is definitely a sense of national pride being offended. People said, ‘Well, if it’s going to be like that, I have a choice and my choice is not to travel to the United States,’" Collins explained. Aggressive border enforcement and worries about being detained or searched have only deepened Canadians’ reluctance to cross south.
Geoff Freeman, president and CEO of the U.S. Travel Association, summed up the sentiment: "The perception is that travelers aren’t as welcome as they once were. The most important thing the administration can do is send a message to travelers around the world that the U.S. is open to business to legal travelers." The coming winter will be a "big test" for tourism-dependent states like Texas, Florida, and Arizona, as they wait to see if Canadian visitors return.
Despite the bruising rhetoric and economic pain, there are faint signs of a thaw. During a recent Oval Office meeting, President Trump joked about a "merger" of the two countries but also praised Prime Minister Carney as a "world-class leader." Whether this signals a new chapter of cooperation or is just another twist in a rocky relationship remains to be seen. For now, businesses and workers on both sides of the border are left to weather the storm, hoping that calmer days—and clearer rules—are on the horizon.