A tariff is a tax placed by a government on goods coming into or out of its country. These are also known as customs duties, as they commonly increase the cost of goods for consumers. Prior to 1913, the year the 16th Amendment was ratified, Americans experienced an increase in the price of goods due to a global trade war fought using tariffs. To end this, the 16th Amendment was passed, granting Congress the ability to impose a Federal income tax.
Canada is the second largest trading partner of the United States of America, only second to Mexico. As of 2025, the U.S. traded approximately $879.9 billion in goods and services with Canada, where the U.S. imports a large number of goods, including oil, chemicals, plastics, and other goods used in production. The United States-Mexico-Canada Agreement (USMCA) was an agreement between the three countries that set the majority of tariffs to zero, which aimed to protect intellectual property rights of domestic producers, develop product and labor standards, and defend against exclusionary rules towards making investments. In July 2026, the U.S. refused to renew the agreement, resulting directly in tariffs placed on goods imported from Canada and Mexico.
As a means of resistance, Canada placed tariffs on September 8, 2026, matching those imposed by the U.S. These tariffs have rates of 15%, 25%, or 50% and apply to products including steel, aluminum, cheese, appliances, clothing, cosmetics, and farm equipment. In addition, 8 of 10 provinces across Canada restricted the sale of U.S. goods such as alcohol.
It is estimated these tariffs will hurt the job market in the U.S., as increased prices and decreased consumer spending will directly lead to a reduction in the number of workers companies require. In addition, the Federal Reserve increased interest rates for the first time since 2023 to reduce inflation rates. It was raised by 25 basis points and is expected to be raised another 25 points by the end of 2026.
The long term effects of these tariffs will not be immediate, as consumers brace for cost-of-living and pocketbook issues.
