September 10, 2026
Vancouver, B.C.
The trade war escalated again this week.
The trade war escalated again this week. Canada’s retaliatory tariffs took effect on September 8, covering $27.6 billion of goods imported from the United States. The United States responded the same day with further changes to its measures on Canadian goods, adding and removing products from its 50 per cent tariff lists and prohibiting selected Canadian imports.
Keeping up with these changes is becoming a challenge of its own. The tariff lists are shifting, implementation dates differ, and individual products can move in or out of scope with little notice.
The United States expanded its 50 per cent tariff lists to include additional Canadian products, ranging from all-terrain vehicles to additional dairy products. It also prohibited imports of selected Canadian alcohol, dairy and motor-vehicle-related products that were previously subject to the 50 per cent tariff. At the same time, products including rock salt and cement were removed from the tariff lists. The additions and removals take effect on September 15, while the import bans take effect on September 29.
While the latest U.S. revisions appear modest in the national trade data to materially alter Canada’s economic outlook, the reality hits differently for businesses and households.
A business does not experience a tariff as a share of national exports. It experiences it through lost orders, narrower margins and the possibility that its product is no longer competitive in its largest export market. A 50 per cent tariff can effectively close the U.S. market even when the product has not formally been banned.
We also need to be realistic about the different resilience profiles of large companies and small exporters. A large company may be able to redirect sales, absorb part of the tariff or reorganize production across locations. A small business is less likely to have alternative customers, suppliers and distribution networks ready to replace the U.S. market.
Canada’s retaliatory tariffs are the more direct channel through which the latest escalation will reach Canadian small businesses and households.
The measures apply to selected U.S. goods and are concentrated in sectors including steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics. Existing Canadian counter-tariffs on U.S. automobiles also remain in place.
The immediate cost falls on the businesses importing these goods, but the impact does not stop at the border. Importers may absorb some of the tariff, pass it on through higher prices or look for alternative products and suppliers. Those decisions affect other Canadian businesses throughout the supply chain.
This means a Canadian business needs to understand both where it buys its products, components, equipment or packaging and where those goods originate. The immediate supplier may be Canadian, but the product itself may come from the United States and therefore be subject to a tariff. In other words, a business may still face the cost of tariffs even when it does not import the product directly.
Simply put, the effect is broader than the sectors named on the tariff lists. The product may cross the border once, but its cost can move through several businesses before it reaches the final customer.
The direct tariff cost matters, but businesses also need to make decisions before the cost is fully known.
A business preparing a quote today may not know what its materials will cost when the work begins. A retailer placing an order may not know whether the same product will remain covered when it arrives. A manufacturer looking for another supplier may face a higher price, a larger minimum order or a longer delivery time.
Some businesses respond by delaying orders, hiring and investment while they assess their costs and customer demand. Others carry more inventory to protect against disruption, tying up cash that could have been used elsewhere. Reducing inventory limits that exposure but increases the risk that the business cannot meet an unexpected order.
This is where a relatively narrow tariff can have a wider economic effect. The initial cost is concentrated in specific products. The uncertainty affects decisions across a much broader group of businesses.
This is where a relatively narrow tariff can have a wider economic effect. The direct cost is concentrated in specific products. The uncertainty affects decisions across a much broader group of businesses. For a small business with limited cash reserves, a delayed payment or cancelled order can quickly become a cash-flow problem.
For households, the impact is unlikely to appear as a single, immediate increase in the overall cost of living.
A tariff does not automatically produce an equivalent increase in the retail price. Some businesses may absorb part of the cost. Others may negotiate with suppliers, change products or find alternatives. The final impact will depend on competition, exchange rates, available inventory and the share of the product sourced from the United States.
Prices are more likely to increase where alternatives are limited or where businesses do not have enough margin to absorb the tariff. That could affect selected appliances, furniture, clothing, electronics, beauty products and goods containing tariffed steel or aluminum.
Households may also experience indirect effects through higher costs for construction materials, wiring, lighting and appliances, which can raise the cost of renovations and housing construction. More expensive materials, equipment and production inputs can raise operating costs for builders, contractors and other businesses.
In reality, the impact will not be equal. Some households can delay a purchase, switch products or absorb a higher price. Others have little flexibility because most of their income already goes to essentials. For these households, even a narrow price increase or loss of work hours can deepen an affordability challenge that already exists.
The timing is important because Canadian households are already carrying high debt loads and managing elevated living costs. Even a selective price increase is harder to absorb when discretionary spending is already under pressure. See Vancity’s Q2 2026 Economic Outlook.
While some provinces are more exposed to U.S. tariffs than others, they are not insulated from the implications. For instance, British Columbia businesses may still purchase affected U.S. products or rely on Canadian suppliers whose inputs are exposed to tariffs. Provincial exposure therefore runs through supply chains as well as direct exports.
The tariff lists matter only as indicators of exposure. Small businesses should be looking at four practical questions:
These questions can help businesses identify where the risk sits before it becomes a cash flow problem.
The bottom line is that tariffs do not have to be large in the national data to matter in pepole’s day-to-day economic decisions. For Canadian exporters, the risk is losing access to U.S. customers. For importers, it is higher input and inventory costs. For other small businesses, it is uncertainty about suppliers, delivery times, contracts and pricing. For households, the impact is more likely to emerge gradually through selected prices, construction and renovation costs, employment and weaker business investment.
1 Canadian goods entering the United States: White House September 8 fact sheet and linked proclamations[whitehouse.gov]
2 U.S. goods entering Canada: Government of Canada consolidated counter-tariff list[canada.ca]
Vancity is a values-based financial co-operative serving the needs of its 588,000 member-owners and their communities, with offices and more than 60 branches located in Metro Vancouver and Squamish, the Fraser Valley, the Sunshine Coast, the Vancouver and Gulf Islands and Alert Bay, within the territories of the Coast Salish and Kwakwaka'wakw Peoples. With $41 billion in assets plus assets under administration, Vancity is Canada's largest credit union. Vancity uses its assets to help improve the financial well-being of its members while at the same time helping to develop healthy communities that are socially, economically, and environmentally sustainable.
