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As of May 2025, the bitter trade war between the United States and Canada has escalated further, with President Donald Trump threatening to raise tariffs on Canadian vehicles to 50% and Prime Minister Mark Carney hitting back with import taxes on a wide range of American goods. While politicians argue in Washington and Ottawa, American households are left wondering: what will this actually cost me?
The answer is complicated. Some costs will show up on price tags; others will hit paychecks and job security. Here’s a sector-by-sector breakdown of how the latest tariff war affects everyday Americans.
Trump’s threat to hike tariffs on Canadian-made cars, trucks, and parts from 25% to 50%—scheduled for January 1, 2027—hasn’t taken effect yet, but the uncertainty is already rippling through the industry. So far, car dealers have absorbed most of the cost increases from existing tariffs, says Bernard Yaros, lead economist at Oxford Economics. “But that cushion is wearing thin,” he warns. “The recently threatened 50% tariffs would feed through to consumer prices more readily than before.”
If the 50% rate becomes reality, Yaros expects manufacturers to prioritize high-margin luxury cars, SUVs, and pickup trucks, while cheaper new cars become scarce. That would push many buyers into the used-car market, driving up prices there as well. The United Auto Workers union has expressed concern that the tariff war could ultimately force some Canadian assembly plants to shift production—or shut down—costing thousands of American jobs tied to cross-border supply chains.
The U.S. is already grappling with a housing affordability crisis, and tariffs on Canadian building materials are making it worse. Canada has matched the U.S. 50% tariff on steel and aluminum, and Carney has added import taxes on plywood, screws, and other wood products. The U.S. imported $23 billion worth of wood products in 2024, nearly half from Canada, according to a Congressional report.
Bill Owens, chairman of the National Association of Home Builders, recently urged Trump to exempt building materials from tariffs, citing an “ongoing housing affordability crisis.” He warned that “building material tariffs heighten market uncertainty, strain supply chains and increase construction costs.” The Forest Products Association of Canada echoed that sentiment, saying tariffs “raise costs on both sides of the border.” Recent data from the U.S. Census Bureau shows that the median new home price has already risen 3% year-over-year, and economists expect further increases as lumber costs climb.
Unlike earlier rounds that focused on raw materials, this retaliation hits finished household goods. Canada has slapped tariffs on carpets, washing machines, furniture, refrigerators, and even knives, forks, and spoons. While that could raise prices on American-made imports, Bradley Saunders, North America economist at Capital Economics, argues the bigger effect is on Canadian consumers, who will simply switch to domestic alternatives. “Like hair care products, you really can just buy that domestically instead,” he says.
But for Americans, the impact is indirect. The Budget Lab at Yale estimates “marginal increases” in furnishing and household equipment prices due to tariffs on lumber, steel, and other inputs. For example, a sofa made with Canadian lumber and U.S. steel could see a $15–$20 price bump. That’s small, but it adds up across multiple purchases.
The trade war has already taken a toll on American wine and spirits. Last year, many Canadian provinces banned U.S. alcohol sales in retaliation, and the American wine and spirits industry reported a more than 70% drop in exports to Canada. Carney briefly asked provinces to restore shelves during trade talks, but after those talks collapsed, bans are expected to return. Saskatchewan and Alberta are the only holdouts, but Saskatchewan has announced a 50% charge on imported U.S. booze starting September 8.
This is a clear blow to American distilleries, especially craft producers who rely on Canadian exports. The Distilled Spirits Council of the United States has called for a negotiated resolution, warning that the ban could permanently alter consumer preferences north of the border.
While consumers notice price hikes, economists say the bigger threat is job losses. Saunders notes that a bespoke furniture producer in British Columbia facing a 50% tariff on exports to the U.S. may have to shut down—but that’s a Canadian story. For Americans, the risk lies in industries that depend on cross-border supply chains. The U.S. forest products sector, for example, employs nearly 200,000 people, and many of those jobs rely on Canadian raw materials. If tariffs disrupt those flows, American mills could slow production.
More broadly, trade frictions feed into uncertainty around the USMCA, the free-trade agreement among the U.S., Canada, and Mexico. Both Canada and Mexico have sought to extend the deal for 16 more years, but the U.S. has signaled it won’t renew in its current form. John Iselin, associate director at the Budget Lab at Yale, estimates that the Canada-specific tariffs cost only about $3 per American household on average—but when combined with Trump’s broader trade war, especially with China, the added cost jumps to roughly $1,000 per family. “It’s hard to view this particular instance with Canada in isolation,” Iselin says. “It’s just another in a series of tariff shocks.”
For most U.S. households, the direct impact of the Canada tariff war will be small—a few extra dollars on a car or a sofa. But the cumulative effect of Trump’s global trade policies, plus the threat of job losses in industries tied to Canada, makes this a risk worth watching. As the 2027 auto tariff deadline approaches and the USMCA hangs in the balance, the real cost may not be what you pay at the store, but what you could lose at work.
