The latest escalation in the US-Canada trade war could affect prices for cars, construction materials, and household goods. This was reported by Qazaqyia.kz citing BBC News.

The North American neighbors have been locked in a bitter economic conflict since US President Donald Trump launched his flagship trade policy on his return to the White House. This week saw the latest move by the Canadians with Prime Minister Mark Carney imposing retaliatory import taxes on a host of US goods, after Trump threatened hikes of his own.

Automotive industry

If Trump's threat to raise tariffs on Canadian vehicles from 25% to 50% from 1 January 2027 becomes a reality, then that would deal a further blow to the automotive industry. Cars, trucks and parts are among the main goods traded between the US, Canada and Mexico, with the manufacturing sector and supply chains stretching across borders.

Despite previous tariffs increasing costs for manufacturers, car dealerships have absorbed the "lion's share" to date, according to Bernard Yaros, lead economist at Oxford Economics. "But that cushion is wearing thin," he adds. "The recently threatened 50% tariffs on Canadian autos, trucks, and car parts would feed through to consumer prices more readily than before."

Yaros thinks higher costs on imports to the US could accelerate a trend of manufacturers prioritising luxury cards, SUVs and pick-up trucks and push up prices in the used-car market if supplies of new but less-expensive vehicles becomes tight.

Carney has decided not to match Trump's 50% tariff threat so far, but a 25% import tax on certain American vehicles has been in place since last year.

Construction materials

Construction materials such as steel, aluminium as well as lumber wood have had tariffs in place before the latest escalation, though Canada has now matched US rates on the metals at 50%. Carney has also imposed import taxes on several US wood products, such as plywood, and even screws used to fix timber together.

That means building firms that import such materials will face higher costs and may choose to pass those on through higher prices - pushing up the cost of homes, for example. The Forest Products Association of Canada says tariffs would "raise costs on both sides of the border", while on the US side, Bill Owens, chairman of the National Association of Home Builders (NAHB) urged Trump to make building materials exempt from his tariff agenda due to an "ongoing housing affordability crisis".

"Building material tariffs heighten market uncertainty, strain supply chains and increase construction costs," he says.

In 2024 the US imported $23bn (C$32bn, £17bn) worth of wood products, with almost half from Canada, according to a US Congress report. But the so-called "lumber wars" between the nations on soft wood used in housebuilding are not new and stretch back decades.

Household items

A key factor in this episode of the tariff war is the volume of household items that have been specifically targeted as opposed to raw materials. Carpets, washing machines, furniture, fridges and even knives, forks and spoons are set to have tariffs applied by Canada.

While there is a risk prices on some of those goods being imported from the US could rise, the more likely scenario is that consumers will turn to domestic alternatives, according to Bradley Saunders, North America economist at Capital Economics. He says Carney's latest move has intentionally targeted goods where Canadians can "shift to domestic suppliers instead". "Like hair care products, you really can just buy that domestically instead," he adds.

Saunders explains Carney's response aims to "minimise the impact on Canadian households as much as possible by picking very fungible goods".

The Budget Lab at Yale, which monitors the impact of US government policy on the economy, says it anticipates seeing marginal increases in furnishing and other household equipment for Americans largely due to tariffs on lumber and other materials.

There may not be a material impact on alcohol prices, but it's clear the trade war has had an impact on Canadians' choice of drink.