Canada-U.S. trade relations have hit a new low.

After the two countries failed to strike a trade deal last week, Trump implemented 50% tariffs on approximately $20 billion worth of Canadian goods. In response, Canada announced reciprocal levies on 700 American products, which are expected to take effect on Sept. 8.

Canadians can expect 50% tariffs on American steel, aluminum, furniture and clothing; 25% tariffs on cheese, select seafood and appliances; and 15% tariffs on electronics and tools. Other impacted categories include agricultural equipment, plastics, lumber, carpets, and pulp and paper products.

The Canadian government also announced a $7.5 billion aid program for workers impacted by the U.S. tariffs on Canadian goods.

“Our dollar-for-dollar, rate-for-rate counter-tariffs, as well as a multibillion-dollar support package, will protect workers, farmers, families and businesses,” said Finance Minister François-Philippe Champagne during a press conference on Aug. 25 at an Ottawa-based roofing company. Champagne was joined by Industry Minister Mélanie Joly, who called buying domestically made products “an act of resistance.”

Speaking after talks broke down over the weekend, Prime Minister Mark Carney alluded to Canada’s “proposed long-term partnerships,” and said the U.S. has “pursued short-term transactions.”

Now, Canadian promo leaders are monitoring the situation closely and coming to terms with a severely strained trade relationship with their North American neighbours.

Botanical PaperWorks (asi/41273), a certified B Corp, offers seed paper and handmade soaps crafted with essential oils – both paper and essential oils are on the Trump administration’s most recent tariffs list, but Kyle Kannwischer, owner and CEO of the Canadian supplier, told Counselor his company hasn’t been affected so far.

“Based on our review to date, we don’t anticipate a broad impact across our product line,” he said, “but we continue to assess individual product categories as additional guidance becomes available.”

However, Kannwischer added, the uncertainty itself is concerning. “For businesses, predictability matters,” he said. “Manufacturers make decisions about sourcing, production, inventory, pricing and customer commitments well in advance. The more certainty we have around the trading relationship, the easier it is to plan and invest with confidence.”

“Uncertainty leads to caution among end-buyers. They’ll be going with smaller orders, or they’ll price-shop, or they’ll hold back completely.” Scott Hulbert, ideavation (asi/229801)

Samantha Fullerton, senior account executive at Counselor Top 40 distributor BAMKO (asi/131431) in Canada, said the developments this week are set to change promo supply chains and cross-border business indefinitely.

“Suppliers that offer [free on board] Canada pricing with product that’s USA-made are going to be forced to re-evaluate their offerings and revisit pricing strategies,” she said. “There will be a ton of difficult decisions to be made. Spend from American customers will shift to American suppliers, and Canadian customers to Canadian suppliers. The issue is going to force a more segregated approach than what we’re used to.”

Gone are the days when sourcing across the U.S.-Canada border was relatively seamless, said Fullerton. “Supply chains will get tighter to avoid the costs of navigating too many new tariffs and additional uncertainties,” she added.

Scott Hulbert, managing director of Ontario-based distributor ideavation (asi/229801), has two primary concerns: the immediate impact of increased costs and the hit that buyer confidence will take as the industry moves closer to the all-important fourth quarter.

“Uncertainty leads to caution among end-buyers,” he told Counselor. “They’ll be going with smaller orders, or they’ll price-shop, or they’ll hold back completely. ‘Wait and see’ isn’t good for anyone. We’re going to see tighter budgets. Companies may even make charitable donations instead of purchasing Q4 gifts.”

Hulbert added that buying domestic products isn’t always easy; a product could be “Canadian-made,” but the raw materials may originate from the U.S. Paper stock, labels and decals are three categories currently impacted by tariffs. And switching suppliers isn’t always a quick solution either, since Canada-U.S. supply chains are so interconnected.

“The optimist in me hopes they’ll figure it out before Sept. 8,” said Hulbert. “I hope so, because we’ve gone round and round and round so many times, and we have such fatigue up here. We’re at a real inflection point.”