Canada and Several European Countries Impose Tariffs on American Goods

What Happened?

Canada and several members states of the European Union (EU) have imposed tariffs on a wide range of American goods. Canada, which is the largest supplier of steel to the United States, said it would impose a 25% tariff on steel, computers, and sporting goods. 

Meanwhile several European countries applied a new round of tariffs on beef, poultry, bourbon, motorcycles, peanut butter, and jeans imported from the United States. 

The President of the EU’s European Commission, Ursula von der Layen said “We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers.” 

Why it Matters

When governments impose tariffs, businesses have two choices, either accept lower profits or pass the costs along to consumers. In almost every instance, businesses choose to pass on costs to consumers to make up the difference.

This recent round of tariffs from Canada and Europe are in direct response to the tariffs started by the Trump Administration. Several officials from the European Union said they chose to apply tariffs that would mostly affect goods in Republican dominated states because those states voted for Mr. Trump. 

For example, tariffs on bourbon could hurt the bourbon industry in Kentucky, which overwhelmingly voted for Mr. Trump in 2024. 

The American Chamber of Commerce to the EU said the U.S. tariffs and EU countermeasures “will only harm jobs, prosperity and security on both sides of the Atlantic.” 

In a subsequent statement Ms. Von Der Layen added “We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs,” suggesting that negotiations could bring the new tariffs to an end on both sides of the Atlantic.

Depending on how long they remain in effect, the new tariffs could raise prices and cost consumers in the United States and Europe billions of dollars. In addition to the economic costs, the trade war between Europe and the United States, and between Canada and the U.S., have increased political tensions between otherwise long-established allies. 

If sustaining the new tariffs becomes a test of political will, so far neither side has indicated they are ready to back down first. Mr. Trump has accused European nations of unfair trading practices against American goods, although he has yet to specify exactly what those measures are.

How it Affects You

Tariffs are taxes, and they artificially raise costs for businesses and prices for consumers. 

If tariffs are high enough and sustained for a long enough time, they can cause economic difficulties including recessions. 

So far the tariffs have only resulted in retaliatory measures and not much in the way of policy changes by any of the affected countries.