Canada collected just $3B from U.S. counter-tariffs before dropping most levies

Canada’s Finance Department says the federal government has collected just over $3 billion from retaliatory tariffs on U.S. imports — a small fraction of the $20 billion the Liberal Party had forecast in its spring election platform.

The shortfall comes after Prime Minister Mark Carney agreed to remove a majority of the tariffs in September to smooth the way for new trade negotiations with Washington. The decision, made ahead of an expected federal budget release next week, is likely to deepen the deficit for the 2025–26 fiscal year.

Carney defended the move during a press conference in Malaysia, saying the counter-tariffs were no longer delivering the intended economic leverage.

“The value of those retaliations was diminishing,” Carney said. “There is a cost at home for those tariffs. They were designed to minimize those costs, but those costs build up over time.”

Tariff rollback and fiscal fallout

Finance Minister François-Philippe Champagne said last week that removing the tariffs was part of a broader strategy to “support Canadian industry,” even if it meant forgoing significant short-term revenue.

“I think you would have seen things change quickly,” Champagne told reporters. “We always need to adapt and review our posture.”

The Finance Department said the $3-billion figure does not include funds redistributed to affected industries through temporary relief programs. Earlier this year, Ottawa granted a six-month exemption for several U.S.-sourced goods, and the government added new exemptions in September — forfeiting another $78 million in potential revenue.

Industry reaction

The Canadian Steel Producers Association says the revenue shortfall was predictable, given the government’s extensive list of product exemptions.

“We’ve been calling on the government to modify the remission framework almost from the beginning,” said association president Catherine Cobden. “What we’d like to see is that the government concentrates on giving remissions for things we don’t produce.”

Cobden said the current framework is “broken,” leading to fewer collected tariffs and reduced support for domestic producers.

Despite criticism from industry groups, Champagne maintained that exemptions were granted “diligently” to prevent further harm to Canadian manufacturers.

Economists question strategy

Economist Bill Robson, president of the C.D. Howe Institute, said relying on tariffs as a significant source of federal revenue was misguided from the start.

“It’s not helpful to have a big revenue shortfall,” Robson said. “We do need to raise revenue, but there are less painful ways of doing it. Tariffs are a very damaging way of raising revenue.”

The Finance Department says it will provide more detailed data on tariff collections and exemptions in next week’s federal budget — which is expected to confirm a larger-than-anticipated deficit following the tariff rollback.