Ongoing trade disputes between the United States and Canada are creating immediate cost, pricing and supply chain considerations for companies operating across the border — here is what business leaders should assess. The U.S.–Canada trade dispute has entered a new and more disruptive phase. Effective Aug. 22, 2026, the U.S. imposed additional tariffs of up to 50% on approximately $27.6 billion of Canadian goods, including certain dairy products, alcoholic beverages, automobiles and auto parts.

Canada responded with retaliatory tariffs on approximately C$27.6 billion of U.S. goods, scheduled to take effect Sept. 8, 2026. The measures will affect a broad range of products, including steel and aluminum, dairy products, appliances, agricultural equipment, pulp and paper, plastics and electronics. 

A MORE COMPLEX TARIFF ENVIRONMENT

The latest U.S. action relies on Section 338 of the Tariff Act of 1930, marking the first use of this nearly century-old authority to impose tariffs. The U.S., following the Supreme Court’s decision earlier this year to limit the Administration’s ability to impose tariffs under the International Emergency Economic Powers Act (IEEPA), has increasingly relied on other authorities to impose tariffs. This includes Sections 122, 232, 301 and now Section 338.

The result for businesses is a more fragmented tariff environment in which product classification, country of origin and the specific legal authority used can materially affect the tariff imposed. Importantly, USMCA qualification does not exempt an otherwise covered product from the Section 338 tariffs; although the proclamations provide separate exclusions for certain categories of goods.

WHAT BUSINESSES SHOULD CONSIDER

Middle-market companies may be particularly exposed to the new U.S. and Canadian tariffs, as they often have fewer sourcing alternatives and less ability to absorb or pass through unexpected costs. The impact may be especially significant for manufacturers, automotive suppliers, food and beverage brands, consumer products businesses and technology companies with hardware, electronics or other cross-border supply chains.

Business leaders should assess:

  • Which products, components and raw materials are subject to current U.S. or Canadian tariffs
  • Whether existing customer and supplier contracts allow tariff-related costs to be passed through
  • If sourcing, customs classification, valuation or supply chain changes could reduce exposure
  • How additional costs affect pricing, margins, forecasts and investment decisions

WHAT TO DO AS TARIFF POLICY SHIFTS

Tariff policy remains fluid, but tariffs are increasingly becoming a recurring operating consideration rather than a temporary trade policy event. Company leaders should incorporate tariff exposure into broader supply chain, pricing and financial planning decisions within their business.

GHJ’s International Tax Practice continues to monitor tariff developments and its broader business and tax implications. Through this, companies can assess how these developments may intersect with their tax and business planning; and when specialized customs or trade advice is required, GHJ can connect them with appropriate professionals within HLB and its broader network.