Trade war deepens as Ottawa targets 700-plus American products with duties of up to 50%
Canada's retaliatory tariffs on CA$27.6 billion worth of US goods took effect at midnight on September 8, escalating the bilateral trade conflict and adding fresh pressure to an already fragile Canadian housing market.
The counter-tariffs, ranging from 15% to 50%, cover more than 700 American products, including dairy, softwood lumber, steel, aluminum, furniture, and beauty items.
Canadian duties on US steel, aluminum, and iron products were doubled to 50%, up from the existing 25% rate, matching the levies Washington imposed on roughly CA$20 billion of Canadian goods on August 22, after trade talks collapsed.
Ottawa described the package as a "dollar for dollar" response, with its product list drawn directly from what the US chose to target. The measure covers approximately CA$27.6 billion in US imports, according to the Government of Canada's Department of Finance.
Prime Minister Mark Carney, in a national video address released Tuesday, was candid about the stakes.
"We couldn't accept what they offered. We wouldn't give what they'd asked. As a result, the US has imposed new tariffs designed to hurt and divide us," Carney said.
BMO Capital Markets' Sal Guatieri says prolonged tariff uncertainty could weaken homebuyer confidence and delay recovery, especially in Ontario and British Columbia.https://t.co/r91L9M9P1O
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 3, 2026
What brokers need to watch
For mortgage professionals already navigating a prolonged Bank of Canada (BoC) rate hold at 2.25%, the counter-tariffs introduce new variables into an already layered rate environment.
The BoC remains caught between competing pressures: tariff-driven inflation pulling against the need to support weakening economic growth.
National Bank expects the BoC overnight rate to hold at 2.25% through 2026 before rising in early 2027, while TD Economics projects a similar hold through year-end. BMO Capital Markets has warned, however, that a rate cut may not materialise this year or in 2027.
Tracy Valko, founder of Valko Financial, previously told Canadian Mortgage Professional that "with US tariff risks and global economic pressures, mortgage rates may remain volatile."
The tariff list also raises direct concerns for housing supply. Canada's new 25% duties on U.S. softwood lumber — pine, fir, and spruce — compound already elevated construction costs at the exact moment new residential builds are needed most.
The Canadian Real Estate Association (CREA) has already downgraded its 2026 home resales forecast, projecting a 1.4% decline year-over-year.
Canada Mortgage and Housing Corporation (CMHC) projected real GDP growth of just 0.7% for 2026, among the weakest non-recessionary readings on record.
Bombardier and the risk of escalation
The week's trade turbulence extended beyond the tariff schedules when US President Donald Trump used Truth Social to call for a boycott of Canadian aircraft manufacturer Bombardier.
"NO MORE SELLING BOMBARDIER IN THE UNITED STATES!" Trump wrote.
Bombardier, which employs workers in more than 20 US states and sources American-made components, pushed back. Shares fell 6.4% on Monday.
Bipartisan rebuttals from Kansas Republican senators Jerry Moran and Roger Marshall, both of whom noted their direct contact with the White House, signal that further escalation carries genuine domestic political cost south of the border.
Ottawa has committed CA$7.5 billion in new business and worker support, supplementing the CA$25 billion already deployed since the US tariff offensive began in April 2025.
RBC Economics noted in July that it expects aggregate growth to improve in the second half of 2026, though that base case was set before the latest 50% levies landed on either side of the border.
Whether Ottawa's support package proves sufficient will have a direct bearing on homebuyer confidence heading into Q4.
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