How the trade war with Canada is hitting US states—and could sway midterm elections

A trade war is a cycle of restrictive trade measures between countries. A tariff is a tax charged on imported goods. It can make foreign products more expensive and put pressure on the exporting country. When the targeted country responds with its own tariffs, the conflict becomes retaliatory and may escalate.

In this dispute, the United States threatened 50 percent tariffs on about twenty billion dollars of Canadian imports. Canada answered with tariffs on twenty billion dollars of US exports. The United States then imposed an import ban on certain Canadian goods. Each move narrows trade and increases pressure on businesses that depend on cross-border sales.

The effects are uneven. Canada’s tariffs target products for which US exporters rely heavily on Canadian buyers. The conflict could widen into autos and oil, sectors that have so far been largely sheltered. That would spread the economic and political consequences beyond the current list.

The dispute began after the United States threatened 50 percent tariffs on about twenty billion dollars’ worth of imports from Canada. Negotiations between Ottawa and Washington failed. Canada then imposed retaliatory tariffs on twenty billion dollars of US exports, creating a tit-for-tat confrontation.

The United States responded with an import ban on certain Canadian goods. These measures work together: tariffs raise the cost of traded products, while an import ban blocks specified goods altogether. The article does not identify every banned product, but it says the measures have concentrated financial pressure on particular industries and states.

The current retaliation covers about twenty billion dollars of US exports, but the conflict may grow. Both governments appear to be preparing for a prolonged dispute. Autos and oil have so far avoided the main trade measures, though the article warns they could become targets.

Canada’s retaliation is relatively small in total value but powerful because it targets goods whose US producers depend heavily on Canadian buyers. The list covers about twenty billion dollars of US exports. That makes the exposure especially serious for companies with few alternative markets.

The article gives striking examples. Canada buys 100 percent of Michigan’s kraft paper exports, 95 percent of Alabama’s oven exports, and 88 percent of Wisconsin’s blue cheese exports. US toilet paper producers also rely on Canada for more than 75 percent of their market. Tariffs therefore threaten sales, revenue, and local industries built around these products.

The burden is concentrated in politically important states, including Pennsylvania, Texas, and Illinois. Broader exposure is also significant. North Dakota sends 81 percent of its exports to Canada, while Michigan and Ohio depend on Canadian demand for autos, machinery, and metals.

When Canada taxes US products, those goods become more expensive for Canadian buyers. US exporters may then sell less, absorb part of the cost, or search for replacement markets. The damage is greatest when a company or industry relies heavily on Canada and has few easy alternatives.

Michigan illustrates the mechanism. Canada buys 100 percent of Michigan’s kraft paper exports. A tariff on that product directly threatens producers’ access to their dominant foreign market. Similar exposure affects Alabama oven exporters and Wisconsin blue cheese producers. Financial pressure can spread to workers, suppliers, and communities built around those industries.

The article describes this harm as concentrated and politically salient. States such as Pennsylvania, Texas, and Illinois are exposed through targeted products and industries. If the dispute continues or expands, more businesses could face lost demand. The resulting local economic pressure may also influence political debates and elections.

Trade policy is made nationally, but its costs are distributed locally. States with industries that sell heavily to Canada can experience sharper losses when tariffs reduce demand. Those effects matter politically because voters, businesses, and candidates respond to economic conditions in their own communities.

Michigan depends on Canadian demand for autos, machinery, and metals, while North Dakota sends 81 percent of its exports to Canada. Maine is also particularly integrated with the Canadian economy. Pennsylvania, Texas, and Illinois appear among states facing concentrated effects from the current retaliation. The same national policy therefore creates different pressures across states.

Those pressures are entering the midterm elections. More than 60 percent of Americans oppose tariffs on Canada, including 64 percent of independent voters. Maine Senator Susan Collins has warned about the tariffs, and Michigan Republican candidate Mike Rogers called for ending the dispute. Local exposure can change candidates’ positions and voters’ choices.

Autos and oil matter because they are large, politically influential parts of North American trade. They have been largely spared so far, limiting the dispute’s immediate reach. But their protection is not guaranteed. Bringing these sectors into the conflict would affect much larger networks of companies, workers, and suppliers.

Autos account for just under 20 percent of trade within the United States–Mexico–Canada Agreement. The United States exempted USMCA-compliant autos and parts from the 25 percent Section 232 national security tariffs imposed in April 2025. Even with that protection, the average tariff rate on Canadian autos and parts rose from 0.2 percent in February 2025 to 9.2 percent in August.

If Section 232 tariffs applied to all auto imports, regardless of USMCA status, importers could pay an additional $44 billion. The article does not specify further oil measures, but warns that both sectors face escalation risks as the midterms approach.

In standard trade practice, the importer pays a tariff to its own government when goods cross the border. The cost may then be absorbed by the importer, passed to customers through higher prices, or pushed back onto suppliers and workers through lower orders. The article shows the resulting pressure on exporters and trade-dependent communities.

A Michigan kraft paper producer illustrates the risk. Canada buys 100 percent of Michigan’s kraft paper exports. If Canadian tariffs make those goods less attractive, the producer may lose sales because finding another market is difficult. The same vulnerability applies to Alabama ovens, Wisconsin blue cheese, and US toilet paper producers that rely on Canada for more than 75 percent of their market.

Dependence magnifies shocks. North Dakota sends 81 percent of its exports to Canada, while Michigan and Ohio rely on Canadian demand for major sectors. Such concentration can turn a national policy into local financial and political pain.