Canada collected $3B from U.S. counter-tariffs before dropping most of them
Canada brought in just over $3 billion in revenue from U.S. counter-tariffs before the federal government lifted the majority of them in September, according to data from the Finance Department — far short of the $20 billion the Liberals had projected in their spring election platform.
The counter-tariffs were introduced as part of Canada’s retaliatory measures against U.S. trade actions, but Prime Minister Mark Carney decided to remove most levies on CUSMA-compliant imports to encourage progress in stalled trade talks with Washington.
The decision comes as Ottawa prepares to release its latest federal budget on Tuesday, which is expected to show a larger deficit than forecasted in the last fiscal update.
“The value of those retaliations was diminishing,” Carney told reporters during a summit in Malaysia, defending the decision despite no final deal with the U.S.
“There is a cost at home for those tariffs… and those costs build up over time.”
Government says move aimed to help Canadian industry
Finance Minister François-Philippe Champagne acknowledged that removing the tariffs would impact federal revenues but said the government’s priority is supporting domestic industries.
“We always need to adapt and review our posture,” Champagne said. “First and foremost, what we’re doing is to support Canadian industry.”
The Finance Department said the $3-billion figure does not include money that was later redistributed to affected businesses. Earlier this year, Ottawa introduced a six-month relief program for several goods — which was still active when most tariffs were lifted.
Economists question revenue shortfall
Bill Robson, CEO of the C.D. Howe Institute, said the shortfall highlights the risk of using tariffs as a revenue tool.
“It’s not helpful to have a big revenue shortfall,” he said. “We do need to raise revenue, but tariffs are a very damaging way of doing it.”
Steel producers blame exemptions
Catherine Cobden, president of the Canadian Steel Producers Association, said she wasn’t surprised by the limited revenue collection, citing numerous exemptions that reduced the government’s intake.
While tariffs on steel and aluminum remain, many other goods were exempted or refunded, costing Ottawa an estimated $78 million in foregone revenue.
“We’ve been calling on the government to focus remissions only on products not made in Canada,” Cobden said. “The remission process in our country is broken — that’s why revenue isn’t matching projections.”
Champagne defended the government’s approach, saying all exemptions were reviewed “very diligently.”
More details expected in federal budget
The Finance Department confirmed that full tariff collection data will be included in next week’s budget release.
As the government faces pressure over spending and an expanding deficit, critics argue that the unexpected tariff shortfall raises further questions about the Liberals’ fiscal management and trade strategy heading into the next budget cycle.
