Oct 2, 2026
The clock is now ticking on the Canada-U.S. trade war after U.S. President Donald Trump announced during an Oval Office discussion that the Canadians would contact him in the next three or four weeks — allowing the U.S. to “win everything.”
Trump continued, stating: “[Canadians] are going to come in and they’re going to say, ‘sir we are sorry’.”
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Apparently, Ottawa isn’t playing along.
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Canada-U.S. Trade Minister Dominic LeBlanc responded a day later, saying in Parliament that he didn’t expect the government to “apologize for standing up for Canadian workers.”
For Canadian households, the real question isn’t who blinks first. It’s how long tariffs — and the prices attached to them — stick around. For Canadians, here’s how to plan.
Where does the trade war stand right now?
Since trade talks between Canada and the U.S. broke down, the jabs — and rhetoric — have escalated quickly.
- Aug. 21, 2026: Prime Minister Mark Carney pulled his trade negotiators out of Washington, D.C.
- Aug. 22: Trump launched a first round of 50% tariffs
- Sept. 8: Canada answered with “dollar-for-dollar” counter-tariffs
- Sept. 15: A wave of updated 50% U.S. tariffs followed
- Sept. 29: U.S. import ban, blocking many Canadian alcoholic beverages as well as some dairy products, and motorcycles (as well as a smattering of other goods)
On this side of the border, Canada’s counter-tariffs of 15%, 25% and 50% cover CA$27.6 billion of U.S. imports, according to a summary of the Finance Canada measures by KPMG, a global accounting and advisory firm. The 50% rate applies to some steel and aluminum products, furniture and clothing, while appliances, dairy products, fish and seafood face 25%.
But at this point in time, formal negotiations between the two countries have stalled.
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Why might the trade war last longer than a month?
Trade watchers, politicians, business owners and consumers on both sides of the border are skeptical of Trump’s timeline.
Alfredo Carrillo Obregon is a trade policy analyst at the Cato Institute, a Washington, D.C.-based think tank. In an interview with Bloomberg, he said a deal would likely require both sides to make concessions they’ve publicly signalled they won’t make, meaning “the current status quo might persist for a while.”
Wolfgang Alschner, a professor of business and trade law at the University of Ottawa, told CBC News it’s “more likely than not” the situation stays unchanged until year-end. His view is that the status quo is painful, but not painful enough to force either side to change position.
Capital Economics, an independent economic research firm, released a report arguing that the renewed escalation will likely delay any lasting renegotiation of the Canada-U.S.-Mexico Agreement (CUSMA).
Why does the length of the trade war matter to your wallet?
The real question for most Canadians is whether a prolonged trade war will lead to increased prices and a higher cost of living. In this respect, Canada’s last round of counter-tariffs, in 2025, offers a useful comparison.
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Research from the Bank of Canada found that about one-quarter of those counter-tariffs reached consumer prices, adding roughly 0.3 percentage points to inflation. If inflation moved from 2% to 2.3% — a 0.3 percentage point increase — the inflation rate increased by 15% relative to its previous level. Meaning, the rate at which prices rise increased by 15%.
In addition, the cost of tariffed goods also increased — roughly 6% higher, on average, than non-tariffed goods.
There was one other important lesson: the effect of tariff-related costs wasn’t permanent. The bulk of those higher prices fell back in line three months after Ottawa removed most counter-tariffs.
For consumers, what’s key is how retailers perceive these current trade headwinds; if retailers perceive a longer trade dispute, this could prompt faster or steeper price increases. This would be unwelcome, given that these price pressures land at a time when the nation’s economy already feels stretched.
What Canadians can do
While you can’t control the negotiations, you can control how exposed your budget and life is to trade-war difficulties. Here are five ways to build a moat around your life and finances:
- Check where big-ticket items are made. Counter-tariffs apply to U.S.-origin goods, so a familiar brand built elsewhere may not carry the surtax. This matters most for appliances, furniture and clothing.
- Skip the panic-buying. In 2025 only a fraction of the tariff reached shelves and prices fell back once tariffs were lifted. Since stockpiling cheese won’t save you much, consider better ways to put your money to work.
- Pad your emergency fund if your job is exposed. Workers in steel, aluminum, dairy, alcohol or autos may want extra cash in a high-interest savings account or a tax-free savings account (TFSA). This buffer will create peace-of-mind and help you ride out the rhetoric attached to this trade war.
- Don’t bank on cheap borrowing. The Bank of Canada has held its key rate at 2.25% since last October, and Capital Economics expects core inflation to pick up early next year. Variable-rate borrowers should budget for today’s rates, not hoped-for cuts.
- Keep your RRSP and TFSA investments on plan. A presidential deadline is a prediction, not a market signal. Invest and rebalance on your schedule, not the news cycle.
Trump’s deadline lands in late October. If a deal arrives, Canada’s 2025 experience suggests prices could ease within months. If it doesn’t, plan as though today’s prices are your baseline through year-end, and treat any breakthrough as a bonus.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
