Although we’d like to think the relationship between Canada and the United States is harmonious (sorry about the burning down the White House in 1814, but that was technically the British), it hasn’t always been the case. For decades, the relationship between the two countries has been, largely, mutually beneficial. Sure, there are the occasional disagreements, especially concerning refining raw materials, quotas, and taxes. One of the most notable was in the mid-’80s, when Ronald Reagan was President and Brian Mulroney Prime Minister. The two world leaders met at the so-called Shamrock Summit in March 1985 and sang When Irish Eyes Are Smiling at the Grand Théâtre de Québec, a nod to their shared Irish heritage.
Despite this display of unity, trade issues between the two countries became apparent just months later with regards to wood, specifically cedar. Issued in March 1986, Wood Shakes and Shingles, a 232-page report from the United States International Trade Commission (USITC), determined “wood shingles and shakes, provided for in item 200.85 of the Tariff Schedules of the United States (TSUS), are being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing articles like or directly competitive with the imported articles.” The recommendation: impose a 35 percent tariff ad valorem (tax derived from an assessed value) for a five-year period on western red cedar wood shingles and shakes.
Like many other tariff issues, the cedar debate was not new, and was examined under the Trade Act of 1974. The U.S. went ahead with the significant tariff in May 1986, referred to by the media as the “Cedar Shingle Showdown.” In the flurry of articles, the Toronto Star wrote: “By making and carrying out threats, the Americans may be able to manipulate our strategies to ensure even more advantage in the final outcome for themselves. This week it’s cedar shakes; next it could be lumber. If we don’t show fierce resistance to these tactics, we’re simply inviting the Americans to push harder still.”
That June, Canada set retaliatory tariffs on many American goods, contributing to trade tensions between the world’s two biggest trading partners. This move included restoring older, previously abandoned tariffs on computer parts, semiconductors, and certain books and periodicals, along with hiking tariffs on everything from Christmas trees and cider to asphalt and oatmeal.
“The Canadian Government takes no pleasure in implementing these actions but legitimate Canadian interests must be protected,” then-Finance Minister Michael Wilson told the House of Commons at the time. Meanwhile, American officials were surprised and disappointed at Canada’s response.
Like many issues do, stories about tariffs faded from the news cycle, emerging again in 1991. The subject came up again in 2018, during Donald Trump’s first term as President. That September, the U.S. Commerce Department rejected a request from Canadian cedar shake and shingle makers to exclude them from softwood lumber tariffs Washington imposed in January. Elected President a second time, Trump’s ever-changing tariff talk saw him threaten to more than double duties on Canadian softwood lumber, to a staggering 34.45 percent, as of April.
These tariffs, and many others, follow Trump’s January 20th “America First Trade Policy,” announcement. “In 2017, my Administration pursued trade and economic policies that put the American economy, the American worker, and our national security first,” said Trump. “This spurred an American revitalization marked by stable supply chains, massive economic growth, historically low inflation, a substantial increase in real wages and real median household wealth, and a path toward eliminating destructive trade deficits.”
Since the America First announcement, relationships between Canada and the U.S. have been strained to the point of snapping. Ostensibly to reduce illegal drugs entering America, Trump issued an executive order, Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border. This would impose a 25 percent tariff on products of Canada, except for energy products, which would be subject to a 10 percent tariff. Canada then retaliated, issuing an order-in-council United States Surtax Order (2025), imposing a 25 percent retaliatory tariff on some goods originating in the U.S.
From politicians to the public, many are shaking their heads in disbelief at the tariff situation between the two former allies, which seems to change daily. Steel, aluminum, energy, auto parts, and other products are on a merry-go-round of ‘are they being taxed more or not?’
Many products, most notably crude oil, are sent to the United States for refining. With the ever-changing threats coming from Washington, Canadian oil has become a lightning rod in the tariff battle. According to the U.S. Energy Information Administration (EIA), Canadian crude oil has “become increasingly important to U.S. oil refineries, now making up most U.S. imports,” stated the EIA last August. “U.S. oil refining capacity stood at 18.4 million barrels per day as of January 1st, 2024. In 2023, 60 percent of U.S. crude oil imports originated in Canada, up from 33 percent in 2013.” Products made from this oil include chemicals, plastics, and transportation fuels.
Although it is impossible for oil refineries to spring up overnight, Trump’s tariff threats have prompted Canadian and American industries alike to question how goods are produced, where raw materials are sourced, and why there is a case for greater refinement in the country of origin. Canadian crude has been sent to the U.S. for refinement since the 1980s, reaching 60 percent of U.S. crude imports last year.
Had the crude been refined in Canada for the past 40-plus years, many believe it would have resulted in thousands of jobs both in construction and the oil sector, with untold sums of money remaining in the country. The issue, however, is far from black and white, and requires billions of dollars in investment to build more refineries and provide access to transportation.
According to the United States International Trade Commission (USITC), 2023 saw $892 billion USD in imports from Canada and Mexico to the U.S. The list includes oil, energy, machinery and transport equipment, lubricants, chemicals, food, potash for fertilizer production, live animals, and more. Canada remains a major supplier to the U.S. of oil and natural gas, lumber, automotive parts, and metals and minerals such as aluminum, diamonds, gold, palladium, titanium and uranium—processed in America.
Unless the United States and Canada do an about-face on tariffs and reciprocal tariffs, confusion and economic uncertainty will persist for both countries. Decades ago, Reagan and Mulroney could at least discuss their points of view on tariffs amicably. The likelihood of seeing Canadian Prime Minister Mark Carney and U.S. President Donald Trump side-by-side onstage singing a duet—and agreeing to end the current tariff chaos—seems low.
