Tariffs: Canadian counter-tariffs will be paid for by Canadians, points out the MEI

Montreal, August 24, 2026 – Canadian counter-tariffs on American products will be paid for by Canadian families, points out the MEI.

“Avoiding signing a bad trade deal is one thing, but deciding to raise taxes on Canadians is quite another,” says Renaud Brossard, vice president of Communications at the MEI. “The Carney government’s response to US tariffs should focus on building a stronger Canadian economy; unfortunately, retaliatory tariffs will have the exact opposite effect.”

Prime Minister Mark Carney has indicated that he is considering raising Canadian tariffs on a number of US products in response to the US decision to increase US tariffs on approximately $28 billion worth of imported Canadian goods.

Canadian retaliatory tariffs would be imposed on products such as steel, household appliances and agricultural equipment.

Counter-tariffs, in effect, are no different from Canada imposing a tax on itself. When the federal government imposes an import duty on American goods, it is ultimately the Canadian importer who pays that price at the border.

Whether used by retail customers, or by companies as manufacturing inputs, the increased cost of these products will be reflected in the price paid by Canadian consumers.

“In the end, US tariffs and Canadian counter-tariffs have the same effect: they reduce purchasing power and undermine the competitiveness of businesses on both sides of the border,” explains Mr. Brossard.

It is worth noting that, according to data from Statistics Canada, the Canadian cost of living has already risen by 24.2 per cent since January 2020.

Ways to soften the impact of US tariffs

Rather than engaging in a tariff war, the costs of which will only be borne by Canadians, the federal government should focus on measures that will strengthen the Canadian economy.

Significant reductions in interprovincial trade barriers could help very quickly. According to the calculations of the International Monetary Fund, these restrictions are equivalent to a nine per cent internal tariff.

For example, the removal of trade barriers just between Quebec and the rest of the Canadian provinces, could increase Canada’s GDP by $69.9 billion all by itself.

Reducing the regulatory and tax burdens on businesses would also help to improve their competitiveness without penalizing consumers.

“Making our economy stronger means removing many of the barriers to prosperity that our own governments have put in place,” concludes Mr. Brossard. “By implementing counter-tariffs, we are unfortunately imposing the same kind of cost on the Canadian economy that President Trump is forcing on the American economy.”

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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