By: The Canada West Foundation Trade and Economic Policy Team

July 30, 2026

Washington’s latest 50 per cent tariffs take effect Aug. 19, and they’re set to widen the gap between an energy-insulated Alberta and Saskatchewan and an exposed British Columbia.

Western Canada will experience the latest round of the Canada–U.S. trade war very differently depending on the province. On July 20, President Donald Trump signed proclamations under Section 338 of the Tariff Act imposing new 50 per cent tariffs on a broad list of Canadian goods, from lumber and plywood to electronics, furniture and machinery, and they’re set to take effect Aug. 19. Unlike earlier rounds, these tariffs also apply to goods that are fully compliant with the Canada–United States–Mexico Agreement (CUSMA).

For British Columbia, the timing could not be worse. For Alberta and Saskatchewan, the story is markedly different. That divergence is exactly the kind of regional imbalance the Canada West Foundation has been tracking throughout this trade war, and it deserves more national attention than it’s getting.

What’s new

The White House says the new duties are meant to offset what it calls Canada’s “discriminatory treatment” of U.S. dairy, alcohol and auto exports. The tariffs are split across three lists covering dairy, alcoholic beverages, and a catch-all motor vehicles list that, despite its name, does not include any vehicles. Instead, it covers electronics and telecom equipment, building materials (lumber, plywood, cement), plastics, furniture, apparel, machinery, cosmetics and agricultural goods. Energy, potash, critical minerals, fish and goods already covered under existing Section 232 tariffs (steel, aluminum, copper, autos, lumber) are excluded.

According to RBC Economics, the newly tariffed goods represent roughly five per cent of Canada’s total exports to the United States, which means more than 80 per cent of Canadian exports will still cross the border duty-free. But the national average masks sharply different provincial realities.

Although perspectives across the country vary on how to handle the ongoing trade dispute, alcohol is at least one area that continues to unite the provinces and territories. The latest round of tariffs slaps back at Canada’s unwavering commitment to keep U.S. beer, wine and spirits off store shelves, and this collective stance appears to be taking a toll across the border. In fact, the White House claims Canadian imports of U.S. alcoholic beverages fell more than 80 per cent between March 2025 and February 2026 compared to the same period in 2024–2025. In response to the July 20 tariff announcement, nine premiers agreed to lift certain barriers so it’s easier for Canadian brewers and distillers to sell alcohol across provincial and territorial borders. Moves like this are part of a larger plan to establish more interprovincial direct-to-consumer sales opportunities and streamline Canada’s economy in the face of an uncertain U.S trade relationship.

The fine print

  • Legal basis: This is the first time Section 338 of the Tariff Act of 1930 has been invoked in the current trade dispute. It lets the president act by proclamation alone, skipping the investigation or national-security review that Section 301 and Section 232 tariffs require.
  • Structure:There are three separate proclamations, each carrying a 50 per cent duty: one for dairy, one for alcoholic beverages and one labelled motor vehicles that encompasses a variety of goods.
  • Effective date:The new tariffs take effect at 12:01 a.m. on Aug. 19, 2026, the statutory minimum 30-day lead time after the July 20 signing.
  • CUSMA-indifferent:Unlike most tariffs in this trade war, the new tariffs apply even to goods that are fully CUSMA -compliant. This is a first, and it overrides the compliance planning many exporters had relied on.
  • Carve-outs:Energy, potash, critical minerals, fish and goods already tariffed under Section 232 (steel, aluminum, copper, autos, lumber) are excluded. These exemptions spare Alberta and Saskatchewan the brunt of this round.
  • No expiry date:Unlike some emergency tariff tools, Section 338 duties remain in effect indefinitely until the president issues a new proclamation modifying or terminating them.

How big is the hit, really?

The 50 per cent headline number is dramatic, but it applies to a relatively narrow slice of trade. A growing chorus of economists is cautioning against reading it as a 50 per cent hit to the Canadian economy. Speaking to The Hub, University of Toronto economist Joseph Steinberg estimates the new measures cover roughly 5.5 per cent of Canada’s exports, including goods that currently enter the United States duty-free under CUSMA. He calculates that applying a 50 per cent duty to that slice raises Canada’s overall average effective tariff rate by about 2.5 percentage points. This is a meaningfully smaller shift than the headline rate implies, though still a real one.

Steinberg’s estimate lines up closely with RBC’s math, which pegs Canada’s national average effective tariff rate rising from roughly three per cent to 5.5 per cent, also about 2.5 percentage points. Both economists point to the same underlying reason: Canada’s largest export categories to the United States aren’t touched by this round at all. Steel, aluminum and autos face their own separate Section 232 tariffs, and oil is fully exempt. Steinberg’s view is that the new duties shouldn’t be read as a systemic threat to the Canadian economy, even as he acknowledges firms and regions with concentrated exposure will feel it directly. Per the aforementioned numbers, this group is disproportionately based in British Columbia.

Scotiabank Economics arrives at a similar order of magnitude through its own calculations. It estimates the effective tariff rate on Canadian goods exported to the United States rises from about 5.5 per cent to 8.6 per cent, or from 4.5 per cent to 7.1 per cent once services are included. Even with these new duties, Scotiabank Economics notes that Canada would still face a lower average effective tariff than any other major U.S. trading partner.

TD Economics puts a growth number on the impact directly. Assuming the tariffs stay in place, it estimates they would shave 0.3 to 0.6 percentage points off Canadian gross domestic product (GDP) growth over the next year, with the actual outcome more likely to land toward the lower end of that range. TD bases part of that estimate on the experience of the steel sector, where Canadian exports to the United States have fallen by roughly half since earlier Section 232 tariffs took hold. This serves as a reminder that even a contained macro impact can still mean a sharp, sector-specific hit. Trevor Tombe, a professor at the University of Calgary Department of Economics and the director of fiscal and economic policy at The School of Public Policy, lands on a similar estimate that shaves roughly half a percentage point off Canada’s annual GDP. This is significant, by Tombe’s assessment, but nowhere near the recession-level shock Canada was bracing for back in early 2025.

British Columbia is the standout in terms of the impact the new tariffs would make. Roughly 14 per cent of the province’s exports to the United States fall under the new tariff lists. This is the highest concentration of any province, and it’s driven largely by high-value electrical components and boards, along with wood and paper products. Because the Section 338 tariffs override CUSMA exemptions entirely, B.C. manufacturers that structured their supply chains around compliance now find that protection gone. The B.C. forestry sector, already worn down by the long-running softwood lumber dispute, is especially exposed. The Globe and Mail reports roughly 20 per cent of B.C. exports come from forestry, with 60 per cent of them going to the United States. Softwood lumber already carries a cumulative levy near 45 per cent once existing anti-dumping and Section 232 duties are stacked together.

Why the Prairies look different

Alberta and Saskatchewan tell a different story. With energy and potash explicitly excluded from the new tariffs, and Section 232 tariffs on steel, aluminum and autos left unchanged, only about one per cent of exports from each province are exposed to this latest round. RBC Economics notes that energy-producing provinces have been comparatively insulated through this trade war and have experienced an economy-wide revenues rise in 2026 as global oil prices moved higher.

Scotiabank Economics points to the same tailwind from a different angle. On top of the direct tariff exemption itself, in its July 22 analysis, Scotiabank Economics cited elevated global commodity prices as a factor doing real work to offset trade friction for Alberta and Saskatchewan exporters. For example, at the time of publishing, Scotiabank notes Brent crude above US$91 and Western Canadian Select at Hardisty trading comfortably above most project break-even levels at more than $68.

The regional divergence

RBC Economics is blunt in saying the new tariffs will widen the growing gap between how energy-producing and non-energy provinces fare through this trade war. British Columbia joins Ontario and Quebec in possibly facing a meaningful rise in average effective tariffs on exports, while Alberta and Saskatchewan largely sit out this round.

That’s good news for exporters from the Prairies in the immediate term. However, a two-speed Western Canada, where one province absorbs a direct hit to its manufacturing base while its neighbours are shielded by resource exemptions, complicates any unified Team Canada response. It also means the case for economic diversification, interprovincial trade and reduced reliance on a single export market cuts differently depending on where one sits in the West.

Manitoba sits closer to the Alberta-Saskatchewan end of that spectrum, though it wasn’t broken out separately in the provincial exposure estimates now circulating. The province’s U.S.-bound exports are dominated by agriculture, with more than $7 billion in goods shipped in the first half of last year alone. There is also a growing critical minerals sector that Premier Wab Kinew has pointed to as a source of leverage rather than vulnerability. Still, Manitoba businesses aren’t shrugging off the trade war. CBC reporting found exporters are still frustrated by the sheer uncertainty of on-again, off-again tariffs, but the province’s export mix appears to be less exposed to this specific round of Section 338 duties than British Columbia’s.

Alberta and Saskatchewan’s bet: diplomacy, not leverage

With energy and potash off the table this round, Alberta and Saskatchewan have both signalled they intend to keep it that way. At this week’s premiers’ meeting in Charlottetown, Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe both declined to use their provinces’ energy and resource exports as bargaining chips in the broader trade fight. Theirs is a notably different posture than Prime Minister Mark Carney’s take, who says “everything is on the table” for federal retaliation if no deal is reached before Aug. 19.

Smith credits some of Alberta’s relative insulation to direct outreach with U.S. businesses and consumers who depend on Canadian energy. She describes them as effectively becoming the province’s own advocates south of the border. Heather Exner-Pirot of the Macdonald-Laurier Institute backs the caution around using oil as leverage, arguing that Canada and the United States are genuinely interdependent on it. Pipeline capacity constraints mean Canada can’t easily redirect that oil elsewhere, so cutting off exports would hit Canadian producers, workers and government revenue as hard as it would U.S. buyers. Meanwhile, Carney has confirmed that talks with Washington are being accelerated rather than paused, telling reporters Canada is intensifying its negotiations even as it keeps its options open.

That restraint is being tested from within Canada, not only from Washington. Ontario Premier Doug Ford has pushed for a harder retaliatory line, floating the idea that Canada could squeeze the United States through energy exports, a lever that, notably, isn’t his province’s to pull. Mahmood Nanji, a former Ontario associate deputy minister of finance now with Western University’s Ivey School of Business, put the underlying dynamic plainly: with energy, critical minerals and potash largely exempt from this round, those resources are the leverage Ottawa would reach for if it chose to retaliate, and Western Canada would carry that cost on behalf of the whole country. Nanji has warned Ottawa against letting the uneven impact become a wedge, arguing the premiers need to present a united front and stressing that “this can’t be a divide-and-conquer thing.”

There’s recent precedent for exactly this kind of trade-off. Earlier this year, Canada resolved a dispute over Chinese tariffs on canola, a major issue for growers in Alberta, Saskatchewan and Manitoba, partly by agreeing to import a quota of Chinese-made electric vehicles. This concession lands squarely on Ontario’s auto sector instead. It’s a useful reminder that the burden of trade negotiations doesn’t always fall where a given round of tariffs originally landed. Western Canada has as much reason to watch how retaliation is designed as it does to watch the tariffs themselves.

Industry voices

Reaction from the bi-national business community has been measured rather than alarmed. The Canadian American Business Council (CABC), which represents companies and workers on both sides of the border, called the new duties disappointing and pressed both governments to return to the table. CABC argues that lasting solutions require dialogue and regulatory cooperation rather than tariffs and warns that the impact of the new duties will be felt across supply chains, industries and communities on both sides of the border.

That measured tone echoes coverage out of Manitoba. Fletcher Baragar, a University of Manitoba economics professor, framed the new round of duties as “more bluster than bite” for the province, in a report by the Winnipeg Free Press. This read lines up with the Prairies’ comparatively low direct exposure and exemption-heavy export mix of energy, potash and agriculture.

Negotiating tactic or the new normal?

Whether this round sticks is genuinely an open question, and reasonable observers land in different places. A few things worth weighing include the following:

  • The pattern favours a deal. RBC Economics notes that tariffs threatened in earlier rounds of this trade war “have often been significantly modified or halted ahead of the implementation date.” The Canadian Federation of Independent Business (CFIB) reports the federal government is planning to intensify trade talks with Washington over the coming weeks, and the 30-day gap between signing and implementation was built in specifically to leave room for that.
  • CUSMA is mid-review. CUSMA entered its annual review process after a July 1 extension deadline passed without a deal. To some analysts, overriding CUSMA compliance with these new tariffs seems like added leverage heading into that review rather than a permanent policy shift.
  • The White House frames tariffs as targeted, not broad. The three proclamations are each tied to a specific, named dispute: Canadian dairy quotas, provincial liquor-board delistings and auto-sector investment rules. The administration presents the new tariffs as a way to correct unfair treatment of U.S. exporters, not as a blanket wall against Canadian trade generally. That kind of narrow framing is often easier to unwind once the underlying irritant is addressed.
  • The tariff mechanism suggests more durability compared to previous rounds. Unlike the emergency tariff powers the courts have pushed against in past rounds, Section 338 carries no statutory expiry and doesn’t require the periodic renewal or judicial review that some earlier tools have in place. TD Economics makes a related point about the design of the tariffs: unlike the broader Liberation Day tariffs of 2025, which were rolled out widely and then eased over time, this batch is narrowly targeted at products chosen specifically because U.S. demand for them is likely to shift away from Canada quickly. This makes them seem less like a bargaining chip and more like a durable policy choice. The CABC’s call for both the U.S. and Canadian governments to return to the table reads as much like a hope as a prediction.
  • The product list might be a tell. Trevor Tombe points out that many of the newly tariffed goods, such as liquor, hockey sticks and other largely discretionary purchases, don’t seem like the product of an exercise aimed at maximizing economic damage to Canada. Tombe reads that as a sign the choices are more symbolic and politically motivated than economically calculated. He views the 30-day implementation window as consistent with a tool meant to shape the upcoming CUSMA negotiations rather than to inflict lasting harm on its own.

The honest answer is that no one, likely including the White House, can say with certainty whether this is a hardball opening bid ahead of the CUSMA review or a lasting feature of the trading relationship. What’s clear is that businesses on both sides of the border are being asked to plan around genuine uncertainty in the meantime, which is its own economic cost regardless of how Aug. 19 ultimately plays out.

Although the 50 per cent tariff on Canadian hockey equipment will have minimal impact on the country as a whole, it has the potential to deeply impact the country’s last-standing major hockey stick factory. In the big picture, the shot at Canada’s favourite pastime is more symbolic than substantive. On paper, it reads like a major blow to the industry. In reality, most hockey gear comes from China and other parts of Asia. Big-name brands like Bauer, CCM and Sherwood will still feel the pinch of the 50 per cent tariff on some parts of their operations, but it likely won’t have as big an impact as it seems at first glance. However, for southern Ontario’s Roustan Hockey, this latest round hits hard. The company produces about 400,000 wooden hockey sticks in Canada each year, and about a quarter go to the United States. Owner and CEO Graeme Roustan acknowledges he’s already fighting an uphill battle in a low-growth industry. During a 2025 tariff treat, U.S. buyers hesitated to purchase from Roustan, with many canceling or delaying orders. Should the 50 per cent tariff increase take hold, it has the potential to deeply impact small but meaningful businesses like Roustan.

There are also concrete signs the door to a deal is still open. Scotiabank Economics states that Carney and Trump have agreed to expedite negotiations and notes that the United States had originally been focused on reaching a deal with Mexico first. This was before Mexico indicated it wants any agreement to be trilateral, pulling Canada back into more immediate talks. In addition, TD Economics notes a scheduling detail worth watching. U.S. Trade Representative Jamieson Greer testified before the Senate Finance Committee on July 22 before travelling to Mexico to continue negotiations, which could bring more clarity on timing.

For his part, Steinberg argues Canada’s best response is a measured one. Rather than escalating with further counter-tariffs, Steinberg suggests Ottawa show some willingness to address the specific U.S. complaints that have “some real validity,” while making the case that the tariffs themselves won’t do lasting damage to the broader economy.

  • Aug. 19 effective date: Tariffs threatened in past rounds have been delayed, narrowed or reversed before implementation. RBC cautions the path from threat to enforcement remains genuinely uncertain.
  • Substitution risk for B.C. exporters: RBC estimates 81 per cent of Canadian exports of newly tariffed products go to the United States, with limited alternative markets in the near term. RBC describes trade diversification as a goal that remains difficult for Canada to achieve quickly.
  • Small business exposure: CFIB reports the tariffs will apply even to CUSMA-compliant goods, superseding the compliance protections many small B.C. manufacturers and exporters relied on.
  • Bank of Canada: RBC expects the Bank of Canada to hold interest rates through year-end, balancing tariff-related growth risks against inflation pressure from rising global oil prices.
  • The longer diversification trend: Scotiabank Economics frames this round of tariffs as accelerating a shift that’s already underway. Canada once sent roughly 87–88 per cent of its goods exports to the United States. That share has fallen to about two-thirds today, and Scotiabank expects continued erosion over the next decade or two. For Western Canada, where products already reach a wider mix of overseas markets through Pacific ports, that longer-run shift is directly relevant to how the West positions itself for growth beyond the U.S. relationship.

Western Canada’s export economy has never been one thing, and this round of tariffs makes that clearer than ever. As Ottawa and Washington head toward the Aug. 19 deadline, the Canada West Foundation will keep tracking how these measures land, province by province, sector by sector.

Canada West Foundation

We provide credible research and analysis on the policy issues that matter most to Western Canada’s economy. Follow along as we track the trade file through the Aug. 19 deadline and beyond.

Sources and further reading

  1. RBC Economics. (2026, July 24). Six takeaways for Canada from latest U.S. tariff threats; GDP likely rose again in May. https://www.rbc.com/en/economics/forward-guidance/six-takeaways-for-canada-from-latest-u-s-tariff-threats-gdp-likely-rose-again-in-may/
  2. Bertuzzi, Sophia. (2026, July 23). B.C. could be the province hit the hardest by Trump’s new tariffs. The Globe and Mail. https://www.theglobeandmail.com/business/article-bc-british-columbia-trump-tariffs-trade-exports/
  3. The White House. (2026, July 20). Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada. https://www.whitehouse.gov/fact-sheets/2026/07/fact-sheet-president-donald-j-trump-imposes-additional-tariffs-on-canada/
  4. Bruce, Graeme. (2026, July 23). These 3 charts show where Trump’s new tariffs could have the biggest impact. CBC News. https://www.cbc.ca/news/canada/charts-trump-tariffs-9.7279519
  5. Canadian Federation of Independent Business (CFIB). (2026, July 21). Canada–U.S. Trade War. https://www.cfib-fcei.ca/en/site/us-tariffs
  6. Lord, Craig. (2026, July 23). Gaps in tariff effects among provinces could test Team Canada’s unity: experts. Investment Executive/The Canadian Press. https://www.investmentexecutive.com/news/economy/gaps-in-tariff-effects-among-provinces-could-test-team-canadas-unity-experts/
  7. Fiacconi, Justin. (2026, July 22). Manitoba business owners feeling the sting of U.S. tariff uncertainty. CBC News. https://www.cbc.ca/news/canada/manitoba/businesses-tired-of-tariff-uncertainty-9.7278850
  8. Bickis, Ian. (2026, June 3). Manitoba Premier Wab Kinew pushes back on latest U.S. tariff announcement. Global News. https://globalnews.ca/news/11888987/kinew-trump-tariff-announcement/
  9. Canadian American Business Council (CABC). (July 20, 2026). CABC Statement on Additional 338 Tariffs on Canada. https://cabc.co/cabc-statement-on-additional-338-tariffs-on-canada/
  10. Gabrielle Piche (2026, July 21). New U.S. tariffs ‘more bluster than bite’. Winnipeg Free Press. https://www.winnipegfreepress.com/business/2026/07/21/new-u-s-tariffs-more-bluster-than-bite
  11. The Hub Staff. (2026, July 21). Trump’s 50% tariffs on Canada are an approximate 2.5% effective rate increase, less severe than headlines suggest: Economist. The Hub. https://thehub.ca/2026/07/21/trumps-50-tariffs-on-canada-are-an-approximate-2-5-effective-rate-increase-less-severe-than-headlines-suggest-economist/
  12. Holt, Derek and Jaykumar Parmar. (2026, July 22). Tariffs Will Expedite Canada’s Diversification on Trade and Investment Away from the US. Scotiabank Economics. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.economic-indicators.scotia-flash.-july-22–2026-.html
  13. Hencic, Andrew. (2026, July 21). U.S. Imposes 50% Tariff on Select Canadian Products. TD Economics. https://economics.td.com/ca-tariffs-2026
  14. Ellingson, Craig. (2026, July 23). Smith touts Alberta diplomacy in finding U.S. ‘advocates’ to help hold off Trump trade war. BNN Bloomberg/CTV News. https://www.bnnbloomberg.ca/tariffs/2026/07/23/smith-touts-alberta-diplomacy-in-finding-us-advocates-to-help-hold-off-trump-trade-war/
  15. The Canadian Press. (2026, July 21). Nine Canadian premiers agree to direct-to-consumer alcohol sales from out-of-province. https://www.ctvnews.ca/business/article/nine-canadian-premiers-agree-to-direct-to-consumer-alcohol-sales-from-out-of-province/
  16. Connors, Trevor. (2026, July 21). Trump Slaps 50% Tariff on Canadian Hockey Sticks. HockeyFeed. https://www.hockeyfeed.com/nhl-news/trump-slaps-50-tariff-on-canadian-hockey-sticks