ECONOMIC BRIEFING
Tariffs Briefing A U G U S T 2 6, 2 0 2 6 - U.S.-CANADA TRADE ESCALATION AND NEW TARIFFS ON USMCA-COVERED CANADIAN GOODS
GEORGIA CHAMBER OF COMMERCE
Tariffs Briefing
U.S.-Canada Trade Escalation and New Tariffs on USMCA-Covered Canadian Goods The Latest New levies have been issued for many Canadian products beginning on August 22nd after negotiations stalled. An additional 50% tariff applies to a variety of Canadian goods, including those that otherwise qualify under the United States-Mexico-Canada Agreement (USMCA). On August 25th, Canada announced new retaliatory tariffs impacting $20 billion in goods, matching the impact of U.S. imposed levies.
How Friday’s Talks Broke Down After three days of talks, the two sides appeared close to a package that could have reduced U.S. tariffs on steel, aluminum, and autos and reopened Canadian provincial markets to U.S. alcohol. Canada said last-minute U.S. changes made the deal unfair and uneconomic, while U.S. officials said Canada declined terms agreed earlier in the week. Prime Minister Mark Carney then suspended the talks and recalled Canada’s team; no further meetings are scheduled, and Canada has announced “dollar-for-dollar” matching tariffs beginning September 8th. Following the announcement of retaliatory tariffs, President Trump is now threatening to implement additional tariffs on Canadian cars, trucks, auto parts, and steel.
New U.S. Imposed Canadian Tariffs The Trump Administration says the new duties via Section 338 respond to Canada’s discriminatory treatment of U.S. motor vehicles, alcoholic beverages, and dairy products. However, the three July 20th proclamations do not simply tariff those products: each applies an additional 50% duty to a separate, product-specific basket of Canadian imports into the United States. Together, the baskets cover roughly $20 billion in Canadian imports, or approximately 5.2% of U.S. goods imports from Canada in 2025. A USMCA carve-out has often been preserved in previous tariffs and trade announcements. However, that is not the case in this instance. If a Canadian product is listed in any of the three Section 338 Annex II schedules, the additional 50% duty applies even when the product satisfies USMCA rules of origin. The Section 338 duties do not apply to Canadian energy, potash, specified fish and critical-mineral products, goods already subject to Section 232 tariffs, or qualifying civil-aircraft articles and parts.
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Tariffs Briefing
CANADIAN IMPORTS SUBJECT TO 50% TARIFF: •
Construction, housing, forest products, and packaging. Portland cement; plaster and cement/concrete; paints; shaped wood, veneer, particleboard, plywood, and doors; pulp and paper; corrugated cartons, sacks, and packing containers; furniture, seats, and lighting fixtures.
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Chemicals, plastics, and rubber. Glycerol, sorbitol, fatty acids and alcohols, oil additives, essential oils and flavor mixtures, starches and glues; vinyl flooring; plastic sheet and film, boxes, bags, bottles, closures, tableware, office goods, and furniture fittings.
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Machinery, electronics, telecom, and tools. Compressors; commercial refrigeration; distilling, agricultural-grading, brewery, printing, and mixing machinery; hand tools; smartphones, networking equipment, cameras, radar and navigation devices, printed circuits, and optical-fiber cable.
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Food, agriculture, horticulture, and alcoholic beverages. Natural honey; vegetable and other seeds; hops and bakery mixes; beer, wine, cider, sake and other fermented beverages; whisky, rum, gin, vodka, liqueurs, cordials, and other spirits.
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Dairy, sweeteners, and food-processing inputs. Milk and cream powders; whey and milk proteins; lactose and lactose syrup; casein; glucose and fructose syrups, molasses, and dairyheavy bakery mixes.
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Textiles, consumer goods, and recreation. Cotton, wool, and silk inputs; fabrics, nonwovens, carpets, and cordage; selected coats, dresses, T-shirts, sweaters, gloves, bags, luggage, footwear, and headgear; toys and video-game equipment; hockey, golf, exercise, skating, and fishing goods; and selected art and collectibles.
Canada’s Counter-tariffs Canada announced a detailed response to the Trump Administration’s tariffs, with Canada’s response set to go into effect September 8th. Tariffs of 15%, 25%, or 50% will apply to roughly $20 billion in U.S. origin goods, matching U.S. rates product by product. The approximately 700 tariff categories span steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, electronics, machinery, clothing, furniture, fish, and other foods. Existing automobile counter-tariffs remain. The list creates direct risk for Georgia exporters across manufacturing, agriculture, forest products, technology, consumer goods, and logistics sectors. For many American products, the tariff would double with the largest share of the new measures affecting steel and aluminum. These input costs will continue to cause challenges for consumers and businesses.
The list of products from the United States subject to counter-tariffs effective September 8th may be found here. gachamber.com
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Tariffs Briefing
Why It Matters to Georgia U.S.-CANADA ESCALATION AND GEORGIA EXPOSURE Canada is Georgia’s largest export market, receiving $6.8 billion in Georgia goods exports in 2025, or approximately 11% of the state’s total goods exports. Canada is also Georgia’s fourth-largest total trade partner, accounting for $13.3 billion in two-way goods trade in 2025. •
Import cost risk. The additional 50% duties are now in effect for covered Canadian inputs and finished goods entered for consumption, or withdrawn from warehouse for consumption, on or after August 22nd.
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Broad sector exposure. The tariff baskets extend well beyond the three named disputes. Potentially affected Georgia industries include construction materials, food processing, beverage distribution and hospitality, chemicals and plastics, forest products, apparel, machinery and electronics, furniture, retail, and logistics.
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Retaliatory export risk. Canada’s published list creates new exposure for Georgia exporters; companies should verify the Canadian tariff item and rate for each shipment.
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USMCA and negotiation risk. A covered Canadian product remains subject to the Section 338 duty even if it satisfies USMCA rules of origin. With negotiations suspended and no new meetings scheduled, the dispute also adds uncertainty to the broader USMCA review.
Learn More about Georgia’s Top Trading Partners Here Outlook The immediate negotiating window has closed. The U.S. duties are in effect, Canada has set September 8th for its matching response, and neither side has announced a path back to the table. Georgia businesses should treat the current measures as an active cost and market-access issue while preparing for rapid changes if negotiations restart or the situation further escalates.
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