BUFFALO, N.Y. (WKBW) — Canada's latest retaliatory tariffs on U.S. goods are now in effect, escalating a trade dispute that could have an outsized impact on Western New York, where billions of dollars in goods and services move across the border each year.
The new Canadian tariffs target roughly $20 billion in U.S. imports, with rates ranging from 15% to 50%. The affected products include steel and aluminum, agricultural equipment, appliances, electronics, dairy products and other goods. The Canadian government says the tariffs cover CA$27.6 billion in imports from the United States.
For consumers, businesses and manufacturers, the immediate impact will largely be felt on the Canadian side of the border, according to Dr. Scott Laing, a clinical assistant professor with the University at Buffalo's School of Management.
"So with Canada retaliating, I know it sounds scary, but it's going to be more difficult for the Canadian citizens because their imports of American goods are now going up," Laing said.
The effects do not necessarily stop at the border.
"We still have a lot of cross-border traffic where those tariffs will add in and compound and compound and compound, making things more expensive, potentially, making everything worse for everybody," he said. "But mainly right now, this is going to be more felt for the Canadian side of the border."
Could the trade war keep escalating?
One of the biggest concerns is the possibility of a continuing cycle of tariffs, with each country responding to the other's actions.
Laing said that concern is valid, but he cautioned against viewing the latest Canadian tariffs as an indication that all U.S.-Canada trade is suddenly being subjected to major new costs.
"The tit for tat tariffs sound very alarming, but ($20 billion in goods) is actually a very small amount compared to the overall trade between the two countries," Laing explained. "It's only like 5%."
He described the move as, in part, an attempt to put pressure on the United States during a period when formal trade negotiations between the two countries have stalled.
"It's almost a little performative," Laing said. "It's them trying to negotiate and try to convince, you know, the other party to play ball in this trade war, right, and get the negotiations moving."
WATCH: Canada's new tariffs could have ripple effects across Western New York
Canadian Prime Minister Mark Carney said Canada had little choice but to suspend talks after negotiations failed to produce an agreement.
"Since a fair deal wasn't on the table, we made the right choice to walk away from a bad one," Carney said in a video statement released Tuesday.
Laing said the response also reflects growing frustration among Canadian voters.
"I think it tells us that Canadian voters are starting to get fed up with the American bluster with these trade negotiations," he said.
Because the United States and Canada share such a tightly integrated economy, Laing said there are other ways Canadians could respond.
"When you arguably disrespect your neighbor so much, at some point they start to fight back, whether it's through the tariffs of their own, whether it's through no longer patronizing Western New York businesses," Laing said. "I think both are viable strategies."
Western New York manufacturers could feel the impact
The effects of the trade dispute may be especially complicated for manufacturers that rely on materials moving back and forth across the border.
"Here in Western New York, we have that cross-border traffic, right?" Laing said. "And so now if Canada's slapping tariffs onto goods where maybe that has to go back and forth quite a bit, now we're gonna see that compounding price really start to be felt."
The concern is particularly relevant for businesses dealing with steel, aluminum and materials used in packaging and manufacturing.
"As we do business and things go this way, they come back, they go that way, they come back, those costs really add up," Laing said. "And it might not seem like it until you see the finished product and it's a little more expensive, but it was getting more expensive every step of the way."
Laing said the biggest impact may not necessarily be on finished consumer products.
"It's very much on the materials with these tariffs, right? Rather than any sort of finished product," he said. "We do see tariffs on strange obscure cheeses and dairy products, but it's the materials kind of being used in every step of a complicated manufacturing process. That's where it's really gonna sting."
Energy could become another source of tension
Trade in physical goods is not the only area where the two countries are economically intertwined.
New York is particularly connected to Canadian electricity. In 2024, New York imported about 6.47 terawatt-hours from Ontario and 1.90 terawatt-hours from Québec, according to NYISO. That relationship has become even more significant with the opening of the Champlain Hudson Power Express, a 1,250-megawatt transmission line bringing Québec hydropower directly into New York City. The line entered commercial operation in May.
The possibility of restrictions on Canadian energy exports could therefore affect not only trade, but potentially energy costs and reliability.
"That would be a significant escalation," Laing said.
Canada is also a major supplier of energy to the United States. In 2025, the U.S. imported an average of about 3.9 million barrels of Canadian crude oil per day, making Canada the country's largest source of crude oil imports.
U.S. diesel prices recently reached a record high of $5.82 per gallon, according to GasBuddy, amid supply disruptions connected to the conflict involving Iran and attacks on Russian refineries. Gas prices are also back on the rise due to new hostilities in the war with Iran.
"Diesel could now hit closer to $6 a gallon and these attacks could also delay the seasonal decline that we tend to see in gasoline," said Patrick De Haan, head of petroleum analysis for GasBuddy. "So Americans may not see much break at the pump with gasoline and diesel could continue to rise."
