CBJ SEPTEMBER 2026

13 FRIENDLY FIRE: INSIDE THE CANADA-US TARIFF WAR RESHAPING TRADE SEPTEMBER 2026 « The Canadian Business Journal 12 The likely result isn’t a sudden exodus of investment — supply chains built over thirty years don’t unwind overnight. It’s something quieter and, in some ways, more corrosive: companies delaying major capital decisions until they see how the conflict resolves. Every delayed plant, delayed expansion, and delayed hire is a cost that doesn’t show up in a tariff schedule but shows up in growth numbers eventually. Who’s Taking the Hit The sectors caught in the crossfire are, unsurprisingly, the most integrated ones. Steel and aluminum are now facing 50% tariffs in both directions — a doubling that puts enormous pressure on producers already operating on thin margins. Dairy, agricultural equipment, and pulp and paper are all on Canada’s retaliation list, hitting American exporters who had come to see the Canadian market as a reliable outlet. Appliances, electronics, and construction materials round out the list on both sides. Automotive manufacturing remains a special case, at least for now. Vehicles and parts have so far been kept out of the latest round of retaliatory tariffs — a deliberate choice, given how many times components cross the border before final assembly — but Trump has floated further auto-specific tariffs, and Ottawa has signaled it has other tools available if that happens, including restrictions on key exports. Energy, similarly interconnected and difficult to reroute on short notice, has so far seen less direct disruption, though it remains an obvious pressure point if the conflict widens. The Markets Have Already Made Up Their Minds Currency and bond markets tend to react faster than politicians finish speaking. As the conflict has escalated, the Canadian dollar has faced renewed pressure as investors reassess the growth outlook, and Canadian equities with heavy cross-border manufacturing exposure have seen increased volatility. None of this reflects a bet that trade between the two countries is ending — nobody seriously expects $1.3 trillion in annual cross-border commerce to simply stop. What markets are pricing in is a costlier, less predictable version of that relationship, with tariff rates that can move sharply within weeks rather than staying fixed for years. A Reckoning Canada Was Already Overdue For There’s a harder question sitting underneath the tariff numbers: how much of Canada’s economic performance was ever really about its own competitiveness, versus simply riding on preferential access to the world’s largest consumer market. Economists have warned for years about sluggish productivity growth, thin business investment, interprovincial trade barriers, and infrastructure approvals that take years rather than months. Privileged U.S. market access made those weaknesses easier to ignore. A trade war doesn’t create those problems, but it does make them impossible to keep ignoring. If access to the American market is now something to be actively fought for, rather THE GORDIE HOWE INTERNATIONAL BRIDGE