Canada Tariffs on U.S. Goods History Over Time

Introduction

A tariff is a tax or duty imposed by a country on imported goods to regulate trade and protect domestic industries. The history of Canadian tariffs on U.S. goods reflects a dynamic economic relationship shaped by protectionist policies, trade agreements, and geopolitical shifts. Canada’s approach to tariffs has undergone significant transformations over time:

19th Century: High protective tariffs, ranging from 5% to 20%, aimed at shielding domestic industries.
1854-1866: Reciprocity Treaty eliminated tariffs on key raw materials and agricultural goods.
1879-1989: The National Policy reinstated high tariffs to promote domestic manufacturing.
1989-1994: The Canada-United States Free Trade Agreement (CUSFTA) phased out many tariffs.
1994-2018: NAFTA further reduced tariffs, eliminating most by 1998.
2019-Present: USMCA maintained zero tariffs for most goods, except certain agricultural products.
2025: Canada imposed 25% retaliatory tariffs in response to U.S. trade policies. While most tariffs were eliminated under these agreements, early 2025 saw the imposition of retaliatory tariffs in response to U.S. trade actions. This article provides an in-depth analysis of Canadian tariffs on U.S. goods prior to 2025, offering historical insights and key developments that have shaped the economic landscape.

19th Century: Protectionism and Early Trade Agreements

Early Tariff Structure (Pre-1854)

Before 1854, Canadian tariffs on U.S. goods were largely protectionist, influenced by British colonial policies. Canada operated under a dual tariff system:

Imperial tariffs imposed by Britain on foreign goods, including those from the U.S.
Colonial tariffs applied to all imports, with a maximum rate of 5%.

For U.S. goods, the combined tariff rates likely ranged between 5% and 20%, depending on the type of product. The exact imperial tariffs remain unclear due to limited archival records, but they contributed to higher costs for American imports into Canada.

The Reciprocity Treaty (1854-1866)

A significant shift occurred with the Canadian-American Reciprocity Treaty of 1854, which allowed duty-free trade on specific raw materials and agricultural products. Under this agreement:

Tariffs on timber, wheat, fish, and other raw materials were eliminated.
U.S. and Canadian goods moved more freely, strengthening economic ties.
The treaty fostered growth in cross-border trade, benefiting industries reliant on natural resources.

This duty-free period ended in 1866 when the U.S. opted not to renew the treaty, leading to the re-imposition of tariffs and renewed protectionism.

The National Policy and Protectionism (1879-1989)

After the termination of the Reciprocity Treaty, Canada reintroduced tariffs on U.S. imports, culminating in Prime Minister John A. Macdonald’s National Policy of 1879. This policy:

Raised tariff rates to protect Canadian manufacturing industries.
Created barriers for U.S. imports, particularly in sectors like textiles and machinery.
Marked a long period of protectionism, where tariff rates varied but remained high on U.S. goods.

For over a century, these protective tariffs shaped Canada’s industrial development, ensuring domestic industries thrived despite limited international competition.

20th Century: Gradual Liberalization and Free Trade

The Move Toward Free Trade (1989-1994)

By the late 20th century, global trade liberalization gained momentum. Canada and the U.S. pursued closer economic integration through:

The Canada-United States Free Trade Agreement (CUSFTA) of 1989, which began phasing out tariffs on many goods.
The North American Free Trade Agreement (NAFTA) of 1994, which expanded tariff eliminations to Mexico and led to duty-free trade for most goods by January 1, 1998.

Under NAFTA:

Most goods between Canada and the U.S. became tariff-free.
Exceptions remained for agricultural products like dairy, poultry, and eggs, which were subject to tariff rate quotas (TRQs).

USMCA and the Modern Trade Era (2019-Present)

NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA) in 2020, maintaining duty-free trade for most goods while retaining some agricultural protections. The agreement continued:

Zero tariffs on manufactured goods and raw materials.
Tariffs on agricultural products under Canada’s supply management system.
Provisions on auto manufacturing requiring higher North American content.

Tariff Rates and Exclusions

During 1994-2018 under NAFTA, tariffs were mostly zero, with exceptions for agriculture, becoming duty-free by 1998 for most goods, but with quotas for dairy, poultry, and eggs. Under USMCA (2019-2024), tariffs continued to be mostly zero, with some agricultural tariffs under supply management, maintaining specific tariffs for these sectors.

The U.S. goods Canada applied tariffs to were primarily dairy, poultry, eggs, and sugar, with high out-of-quota tariff rates, such as approximately 250% for dairy products, applied when imports exceeded quota limits.

Net Revenue to Canada

The net revenue to Canada from tariffs on these U.S. goods, while the U.S. did not collect similar tariffs on Canadian goods, is the revenue from out-of-quota imports. However, evidence leans toward U.S. exports rarely exceeding these quotas, suggesting minimal revenue, though exact figures require specific import data not readily available here. NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA) in 2020, maintaining duty-free trade for most goods while retaining some agricultural protections. The agreement continued:

Zero tariffs on manufactured goods and raw materials.
Tariffs on agricultural products under Canada’s supply management system.
Provisions on auto manufacturing requiring higher North American content.

While USMCA upheld free trade principles, economic tensions persisted, particularly regarding U.S. tariffs on Canadian steel and aluminum.

Why Did Canada Impose Retaliatory Tariffs in 2025?

The Trade War of Early 2025

In response to U.S. President Donald Trump’s imposition of 25% tariffs on Canadian goods, Canada retaliated with its own tariffs. On February 4, 2025, Canada implemented:

A 25% tariff on select U.S. goods, affecting imports worth C$30 billion.
Targeted products including beer, wine, and household appliances.

These tariffs reflected an escalation in trade tensions, disrupting established free trade frameworks.

The Impact of Retaliatory Tariffs

The retaliatory measures:

Increased costs for U.S. exporters and Canadian consumers.
Highlighted vulnerabilities in Canada-U.S. trade relations.
Prompted negotiations aimed at restoring tariff-free trade.

Specific U.S. Goods Subject to Tariffs

During both NAFTA (1994-2018) and USMCA (2019-2024), Canada applied tariffs primarily to agricultural products under supply management:

Dairy (including milk, cream, cheese, butter) – Out-of-quota tariffs around 250%.
Poultry – High out-of-quota tariff rates.
Eggs – Subject to tariff rate quotas.
Sugar – Specific tariff protections.

These tariffs were applied only to quantities exceeding the quota, a key issue in U.S.-Canada trade disputes. Canada’s TRQ system allowed duty-free imports up to a specific limit, after which high tariffs applied. Despite these policies, U.S. exports rarely exceeded quotas, limiting Canada’s revenue from these tariffs. The retaliatory measures:

Increased costs for U.S. exporters and Canadian consumers.
Highlighted vulnerabilities in Canada-U.S. trade relations.
Prompted negotiations aimed at restoring tariff-free trade.

Summary of Tariff Rates and Trends

Period	Tariff Rates on U.S. Goods	Notes
Pre-1854	Likely 5%-20% (colonial + imperial tariffs)	Protectionist policies dominated.
1854-1866 (Reciprocity Treaty)	Zero for specific goods (raw materials, agriculture)	Treaty fostered duty-free trade.
Post-1866-1879	Varied, increased with protectionism	Tariffs reinstated after treaty ended.
1879-1989 (National Policy to CUSFTA)	High protective rates, specifics varied by product	Aimed at protecting domestic industries.
1989-1994 (CUSFTA)	Gradual reduction, mostly eliminated by 1994	Paved the way for NAFTA.
1994-2018 (NAFTA)	Mostly zero, exceptions for agriculture	Duty-free trade achieved by 1998.
2019-2024 (USMCA)	Mostly zero, some agricultural tariffs	Continued tariff eliminations with limited exceptions.
Early 2025 (Retaliatory)	25% on certain goods (C$30 billion)	Response to U.S. tariffs on Canadian exports.

Key Takeaways

19th Century Protectionism: Canada imposed high protective tariffs on U.S. goods, typically ranging from 5% to 20%.
Reciprocity Treaty (1854-1866): This treaty eliminated tariffs on select goods, fostering trade, but was not renewed in 1866, leading to a return of tariffs.
National Policy (1879-1989): Protective tariffs were reintroduced to support Canadian manufacturing, with high but varying rates.
CUSFTA & NAFTA (1989-2018): Tariffs were systematically phased out, with NAFTA eliminating most tariffs by 1998, but agricultural quotas remained for dairy, poultry, eggs, and sugar.
USMCA (2019-Present): Continued the tariff-free framework for most goods, with high out-of-quota tariffs (up to 250%) on certain agricultural products.
2025 Retaliatory Tariffs: Canada imposed 25% tariffs on U.S. goods worth C$30 billion in response to U.S. trade actions, highlighting ongoing trade tensions.
Limited Revenue from Tariffs: Canada’s revenue from tariffs on U.S. goods was minimal due to TRQs, as U.S. exports rarely exceeded quota limits.

Conclusion

The history of Canadian tariffs on U.S. goods reflects an evolution from protectionist policies in the 19th century to modern free trade agreements like NAFTA and USMCA. While most tariffs were eliminated by the late 20th century, 2025’s retaliatory tariffs underscored the fragility of trade relations amid shifting economic policies. As Canada and the U.S. navigate trade tensions, historical patterns highlight the cyclical nature of tariff disputes and economic cooperation. Understanding these trends is essential for businesses, policymakers, and trade analysts assessing the future of North American trade.