Canada struck back at the United States on Tuesday with retaliatory tariffs on about USD 20 billion worth of American goods, including steel, dairy products, appliances and farm equipment, as the trade war between the once-friendly neighbours escalated sharply.The tension threatened one of the world’s largest trading relationships. The new tariffs extended well beyond industrial goods, hitting everyday purchases such as seafood, cheese, clothing, cosmetics and toilet paper, with some facing duties as high as 50 per cent.Canada’s retaliation came after the Trump administration imposed 50 per cent tariffs over the weekend on Canadian goods following the collapse of trade negotiations.Canadian Prime Minister Mark Carney accused Washington of trying to subordinate Canada and said US demands during the failed talks showed that Americans wanted to “destroy our major industries”.President Donald Trump intensified the confrontation on Monday, telling Canadian leaders to “fall in line” or face consequences “far WORSE” than existing tariffs and threatening new 50 per cent tariffs on Canadian vehicles, auto parts and steel.Trump added another provocation on Tuesday, saying the United States was giving “serious consideration” to renaming Lake Ontario as “Lake America” in a feud with Ontario Premier Doug Ford. Such a change would be reminiscent of the Republican president’s unilateral action last year by executive order to rename the Gulf of Mexico as the Gulf of America.The tariffs will take effect on September 8 at rates of 15 per cent, 25 per cent and 50 per cent, with Canada matching the corresponding US tariff rates on more than 700 products such as pulp and paper and electronics.The tariffs on many American products would double from 25 per cent to 50 per cent, with the largest share of the new measures affecting steel and aluminium.Canadian officials said the goal is not to raise revenue but to protect Canadian companies and reduce US imports.US steel imports, for example, have already fallen 30 per cent since Canada imposed a 25 per cent tariff, and the new 50 per cent rate is expected to cut them further, Canadian officials said.Goods facing 50 per cent tariffs include some steel and aluminium products, furniture and clothing. Appliances, dairy products including cheese, fish and seafood, and certain steel and aluminium derivatives will face 25 per cent tariffs. Existing Canadian counter-tariffs on US autos will remain in place.Canada also announced a support package for workers and businesses affected by the dispute worth 7.5 billion in Canadian dollars (USD 5.4 billion).Canadian officials acknowledged the counter tariffs will raise costs for some businesses and consumers but said they expect the overall economic effects to be moderate.They said the government has provided more than 30 billion Canadian dollars (USD 21.7 billion) in tariff-related support since the beginning of 2025 – far more than it has collected in retaliatory duties – as it tries to cushion the blow from the trade fight.Canada and the United States have deeply integrated supply chains across autos, energy, agriculture and manufacturing, making a prolonged trade fight potentially costly for businesses and workers on both sides of the border.Businesses and consumers are caught in the middle, facing uncertainty about how much prices may increase.Michael Howard II, owner of a furniture business in Warren, Michigan, outside Detroit, said the tariffs will hamper the “ability for us to put food on the table for our family” and affect “the ability for us to give back to our community”.Howard and his wife started their business a decade ago. They make and sell everything from dining room tables to bookcases.”To say that we don’t need Canada is just disingenuous,” he said. “It’s dishonest. And it’s just absolutely not truthful. We need our neighbour, but also they need us.”Carney said on Monday that Canada may need to move away from matching US tariffs dollar for dollar and instead use more targeted retaliation aimed at protecting Canadian workers and businesses.