August 2026 Trade Updates: U.S.-Canada Talks Collapse

August 27, 2026

50% U.S. Tariffs Take Effect; Canadian Dollar-for-Dollar Retaliation 

After a three-day extension of the Section 338 deadline (originally set for August 19), talks on Friday 21 August between Minister LeBlanc (Canada), Chief Negotiator Charette (Canada), and USTR Jamieson Greer (U.S.) took place to push for a compromise. The negotiation was set to reduce the economic uncertainty bubbling between the two countries since early 2025, and to set the stage for the next CUSMA/USMCA review. It is unclear if U.S. and Canadian leaders will return to the negotiating table before U.S. Midterms on 3 November.  

On 25 August, Canadian leaders announced a retaliatory response to U.S. tariffs. The response targets select U.S. goods, notably frozen fish, dairy, and steel. The countermeasures range between 10% and 50% and were designed to mimic U.S. tariffs on a dollar-for-dollar basis.  

 Timeline of Developments

• Aug. 22 – The U.S. imposed 50% Section 338 tariffs on wide range of goods 
• Aug. 23 – Canada announced they will retaliate dollar-for-dollar, pursuing sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. (Effective Sept. 8) 
• Aug. 24 – President Trump threatens further 50% tariff on all autos, auto parts and steel. (Effective Jan. 1, 2027) 
• Aug. 25 – The Government of Canada announced additional measures for Canadian businesses impacted by tariffs including fish, cheese, refrigerators, trailers (See full list of products here) 

Background

The U.S. proposed Section 338 tariffs cover a wide range of goods, but primarily encourage Canada to:  

• Modify dairy import quotas 
• Reinstate U.S. alcohol sales in Canadian provincial sales through the liquor boards 
• Drop countermeasures on imported U.S. vehicles 

Canada was willing to negotiate the above if the U.S. planned to reduce Section 232 tariffs targeting Canada’s steel, auto, and aluminum sectors.  A deal did not come into fruition after talks, letting the deadline expire. This now sets 50% tariffs targeting Canada into effect after Saturday, 22 August, with Canadian retaliatory tariffs coming into effect 8 September.    

Cold Chain Impact 

The key change is that foods and farm products covered by USMCA can be included in the tariffs this time. USMCA-compliant status no longer exempts a covered good, which breaks from earlier 2026 actions that honored the USMCA carve-out. 

Dairy is largely exposed after this week’s developments regarding Section 338. The U.S.’s dairy proclamation covers fifty-two tariff lines that include: fluid milk, cream, yogurt, and fermented dairy, cheese, and butter. This means that moving forward, Canadian dairy exporters will need to pay the 50% tariff in addition to existing duties without the previous USMCA relief. 

The Canadian retaliatory tariff list (see full list here) particularly targets varieties of live, fresh, and frozen fish, which will be targeted up to 25%. This is notable as Canada is the U.S.’s largest seafood trading partner. In 2025, the U.S. imported $4.3 billion USD from Canada, according to SeafoodSource. Conversely, in 2025 the U.S. sent $881 million USD of seafood to Canada, with $248 million worth of lobster.  Canada’s retaliatory tariffs also include steel, which may impact cold storage construction, as well as select refrigeration units and trailers.  

Industry survey data from Lineage this year showed that approximately 73% of operators expect tariffs to keep hurting margins, with rising demand for temperature-controlled trucking and cold storage near the borders.