Note

Economic and Fiscal Outlook Assessment Note – Economic Impact of Recent Canada-U.S. Trade Measures

Oct 20, 2026

Highlights

Since early 2025, successive rounds of tariffs, retaliatory measures and product-specific restrictions have increased barriers to Canada-U.S. trade.
PBO estimates that trade actions introduced since June 2026 have increased the trade-weighted average effective U.S. tariff rate on imports from Canada from 5.3 per cent to 7.7 per cent. Canada's response to the new U.S. tariffs has increased the equivalent Canadian rate on imports from the United States from 1.6 per cent to 3.0 per cent.
PBO estimates that the combined Canada-U.S. trade measures introduced since early 2025 will reduce the level of Canada's real GDP by 1.4 per cent after five years, relative to a pre-tariff baseline in which the bilateral trading relationship remains at 2024 levels. This tariff impact has been factored into PBO’s wider [Economic and Fiscal Outlook, October 2026](https://www.pbo-dpb.ca/en/publications/RP-2627-011-S--economic-fiscal-outlook-october-2026--perspectives-economiques-financieres-octobre-2026) released today.
Actual trade outcomes reflect a range of factors beyond tariff policies, including commodity prices, global growth and adjustments by exporters. Recent data indicate stronger export performance as of Q2 2026 relative to what might be expected from a bilateral tariff analysis alone.