What is the expected impact of the new US 'Section 338' tariffs on Canada's overall effective tariff rate, and how does it compare to the current rate?

According to National Bank analysts, the new US 'Section 338' tariffs — a 50% levy on about 5% of US imports from Canada — would raise Canada's average effective tariff rate on exports to the US from about 5% to just over 7.5%. Although the 50% figure appears severe, it applies narrowly, and since 85% of Canada–US trade is registered under the USMCA and thus remains tariff-free, the overall increase is modest. The analysts emphasize that the 'tariff rate actually paid' would be much lower than 7.5% because the high rate would likely discourage US buyers from purchasing affected Canadian goods.

How has Canadian Prime Minister Mark Carney responded to the prospect of new US tariffs, and what constraints exist on potential Canadian retaliation?

Prime Minister Mark Carney stated that 'everything is on the table' for retaliatory measures if no trade agreement is reached with the US, but he explicitly cautioned against premature action, saying it would be 'counterproductive at this stage to respond in advance'. Notably, Canada is unlikely to use oil exports as a bargaining tool: Alberta’s premier warned that curtailing oil shipments could provoke a US response shutting down the Line 5 pipeline, which transports oil from Alberta through the US to Sarnia, Ontario. While Alberta and Ontario are exploring a new all-Canadian 3,300km pipeline to Sarnia, the project would take years to complete, leaving no near-term alternative to Line 5.

Analysts: Fresh US Tariffs Raise Effective Rate on Canadian Goods to 7.5%

Jul 24, 2026

National Bank analysts estimate new US Section 338 tariffs will raise the effective rate on Canadian exports to over 7.5%, impacting the chemical and energy sectors where 80% of production targets the US market.

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Analysts: Fresh US Tariffs Raise Effective Rate on Canadian Goods to 7.5%

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