If you’ve been watching the news lately, it’s easy to think the trade war between Canada and the U.S. started in 2017. Like it was some brand-new invention. Honestly, that’s just not true. People tend to forget that before the shouting matches and the 25% steel surcharges, there was this massive, complicated web of rules.
Canada tariffs before Trump existed, but they weren't used as weapons. Not usually, anyway.
Basically, we lived in a NAFTA world. Since 1994, the North American Free Trade Agreement had stripped away the "traditional" tariffs on almost everything crossing the border. If you were moving car parts, oil, or laptops, the tariff was effectively 0%. But "free trade" is rarely actually free. There were always these weird little pockets where the walls stayed high.
The Wall Around the Dairy Aisle
If you want to understand why trade talks always turn into a fistfight, look at cheese. Specifically, look at Canada’s "supply management" system.
For decades before 2017, Canada used a quota system to protect its dairy, poultry, and egg farmers. They didn't just have a small tax; they had a literal fortress. If a U.S. company wanted to sell milk in Canada beyond a tiny allowed amount, they got hit with tariffs that were—wait for it—between 200% and 300%.
It sounds insane. $300%$? Yeah. It was designed to be a "keep out" sign. This wasn't something new that popped up recently. It was the status quo for years under Harper, Martin, and Chretien. American farmers hated it, but for a long time, it was just the cost of doing business.
The Never-Ending Softwood Lumber Saga
Then there’s the wood. Oh, the wood.
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The U.S. and Canada have been fighting over 2x4s since the 1980s. This isn't an exaggeration. Before the 2016 election, the 2006 Softwood Lumber Agreement (SLA) was the law of the land. It expired in late 2015.
Basically, the U.S. claimed Canada was "subsidizing" its lumber because most Canadian trees are on government land. In the U.S., most timber is private. The Americans argued that the low "stumpage fees" Canadians paid to the government were an unfair advantage.
- When the 2006 deal was active, Canada actually collected export charges on its own wood to keep the peace.
- Once it expired in 2015, we entered a "grace period" where no one did anything.
- But the tension was thick. Everyone knew the tariffs were coming back.
It was a cycle. Peace, then lawsuits, then 20% duties, then a new deal. Wash, rinse, repeat.
The Auto Pact Legacy
One of the coolest—and most boring—bits of history is the 1965 Auto Pact. Before NAFTA even existed, this deal basically turned the Great Lakes region into one giant car factory.
By the time we got to the early 2010s, parts were crossing the border six or seven times before a car was finished. Because of this integration, Canada tariffs before Trump on the automotive sector were virtually non-existent for anything that met "rules of origin."
If at least 62.5% of the car was made in North America, no tariff.
This created a weird dependency. You couldn't just "tax the other guy" without hitting your own supply chain. If the U.S. put a tariff on Canadian steel, a Ford plant in Michigan would suddenly find its own raw materials costing more. It was a mutual hostage situation that kept things stable for a long time.
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The Hidden 35% Default Rate
Here’s a fact that surprises most people: Canada actually has a "General Tariff" rate of 35%.
Wait, what?
Yeah, it’s written in the Customs Tariff Act. But—and this is a big "but"—almost nobody pays it. This is because Canada is part of the World Trade Organization (WTO). Almost every country we trade with has "Most-Favored-Nation" (MFN) status.
Before 2017, the average weighted tariff Canada actually collected on all imports was tiny. We're talking around 1.5% or less.
The system was built on the idea that 35% is the "punishment" rate for countries we don't like, while everyone else gets the low, friendly rates. Most of what you bought from the U.S. back then—iPhone cases, jeans, tools—came in at 0% because of NAFTA.
Why the "De Minimis" Mattered
If you ever tried to buy something from a U.S. website before 2016, you probably remember the "surprise" bills at the door.
Canada had a "de minimis" threshold of just $20 CAD. That meant if you bought a $25 t-shirt from a shop in Ohio, the government could technically hit you with duties and sales tax. The U.S., meanwhile, had a threshold of $200 (which they later bumped to $800).
This was a massive point of friction. It wasn't a "tariff" in the sense of a trade war, but it acted like one for regular people. It was a protectionist wall for Canadian retailers who didn't want to compete with Amazon.com.
Real-World Impact: The 2015 Snapshot
Let’s look at a "normal" year, say 2015.
If you were a Canadian business importing machinery from the U.S., you paid $0.
If you were a Canadian dairy processor importing American butter, you might pay 298%.
If you were a U.S. builder buying Canadian cedar, you were currently paying 0% because of the expiring agreement, but you were looking over your shoulder.
It was a world of "managed trade." It wasn't "free," but it was predictable. You knew where the traps were. The dairy farmers knew their wall was solid, and the car companies knew their parts would move freely.
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Actionable Insights for the Modern Era
Understanding the pre-2017 landscape isn't just a history lesson. It's a map for what happens next. Here is how you should handle the current volatility based on what we've learned from the "stable" years:
- Watch the Rules of Origin: Just because a tariff is "0%" doesn't mean it's automatic. You need to prove where the stuff was made. In the old days, a lack of paperwork was the #1 reason people paid "phantom" tariffs. Keep your certificates of origin updated.
- Diversify Small Shipments: If you are a small business, remember that the "de minimis" thresholds (now higher under USMCA) are your best friend. Breaking up large orders into smaller shipments can sometimes legally bypass the duty wall.
- Monitor the "Stumpage" Debate: The softwood lumber dispute never dies. If you’re in construction or furniture, always keep a 15-20% "contingency fund" for lumber. This dispute is cyclical and will likely return to the high-tariff phase every few years.
- Dairy is the Red Line: Don't expect the high dairy tariffs to ever fully disappear. No matter who is in charge, Canada treats its supply management like a national religion. If you are trying to export food to Canada, focus on "further processed" foods (like frozen pizzas) rather than raw ingredients, as the tariffs are often lower on finished goods.
The truth is, Canada tariffs before Trump weren't about "winning" or "losing." They were about maintaining a very delicate, very old balance between two neighbors who can't live without each other but can't help bickering over the fence.