What tariffs will really cost Canadians and Americans

Key developments are emerging from the global stage. What tariffs will really cost Canadians and AmericansImage source, Getty ImagesImage caption, Donald Trump and Mark Carney have both declared tariffs on each other's countryByMichael RaceBusiness reporter, Reporting fromNew YorkPublished10 minutes agoA raft of new tariffs have been announced during the latest escalation of the trade war between the US and Canada. The North American neighbours have been locked in a bitter economic conflict since US President Donald Trump launched his flagship trade policy on his return to the White House. This week saw the latest move by the Canadians with Prime Minister Mark Carney imposing retaliatory import taxes on a host of US goods, after Trump threatened hikes of his own.

As the dust settles in this tit-for-tat tariff row, what will be affected most on both sides of the border? CarsIf Trump's threat to raise tariffs on Canadian vehicles from 25% to 50% from 1 January 2027 becomes a reality, then that would deal a further blow to the automotive industry. Cars, trucks and parts are among the main goods traded between the US, Canada and Mexico, with the manufacturing sector and supply chains stretching across borders.

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Despite previous tariffs increasing costs for manufacturers, car dealerships have absorbed the "lion's share" to date, according to Bernard Yaros, lead economist at Oxford Economics. "But that cushion is wearing thin," he adds. "The recently threatened 50% tariffs on Canadian autos, trucks, and car parts would feed through to consumer prices more readily than before.

"Yaros thinks higher costs on imports to the US could accelerate a trend of manufacturers prioritising luxury cards, SUVs and pick-up trucks and push up prices in the used-car market if supplies of new but less-expensive vehicles becomes tight. Carney has decided not to match Trump's 50% tariff threat so far, but a 25% import tax on certain American vehicles has been in place since last year. HomesConstruction materials such as steel, aluminium as well as lumber wood have had tariffs in place before the latest escalation, though Canada has now matched US rates on the metals at 50%.

Carney has also imposed import taxes on several US wood products, such as plywood, and even screws used to fix timber together. That means building firms that import such materials will face higher costs and may choose to pass those on through higher prices - pushing up the cost of homes, for example. The Forest Products Association of Canada says tariffs would "raise costs on both sides of the border", while on the US side, Bill Owens, chairman of the National Association of Home Builders (NAHB) urged Trump to make building materials exempt from his tariff agenda due to an "ongoing housing affordability crisis".

"Building material tariffs heighten market uncertainty, strain supply chains and increase construction costs," he says. In 2024 the US imported $23bn (C$32bn, £17bn) worth of wood products, with almost half from Canada, according to a US Congress report.

The story has become one of the most prominent items on the global agenda.