The U.S. imposed 50 per cent tariffs on US$20 billion of Canadian goods Aug. 22, hours after Prime Minister Mark Carney suspended trade talks with Washington. None of the new tariffs affect the space sector.
The Prime Minister was blunt about why negotiations failed. “In short, they asked too much and offered too little,” he said in his prepared remarks, adding that the U.S. had proposed new terms “that were uneconomic, unfair, and undermined the net benefits to Canada.” Asked by a reporter afterward whether this amounted to a trade war, he didn’t hedge: “You’re at war when you get attacked. We got attacked.”
With the Prime Minister coming out with a very strong response on how the negotiations fell apart, and with the unpredictability of the U.S. administration, particularly President Trump, what comes next is not likely to be good. In a trade war, no one wins, and the people of each country pay the price for the missteps of their governments.
For Canada, it’s easy to state the obvious. The U.S. started the trade war and Canada tried, as we do, to work towards what would hopefully be a reasonable deal. Having failed to reach a deal, and frankly based on what we’ve learned from the U.S. administration since it started its global tariff policy, we shouldn’t be surprised. Canada must now play the long game. That long game should be strategic. The Prime Minister said Canada will retaliate on Sept. 8. I expect that retaliation will be strategic. But by putting a date of just over two weeks from now, there is wiggle room to make a deal, though that seems unlikely.
While Canadians may want to go toe-to-toe on reciprocal tariffs, especially where Canada has leverage, namely oil and gas, which the U.S. depends on, that won’t help the situation. Canada was already on a path to increase who we trade with. That policy is the way forward while working towards a deal when the U.S. is ready to negotiate nation-to-nation as opposed to trying to dictate terms. That, unfortunately, could be years away. For while the Trump administration ‘only’ has just over two years left, we have no idea what the next administration will bring. So Canada should prepare for the worst.
Is the space sector safe?
Yes for now. But that doesn’t mean anyone should rest easy.
Space hardware sat out this round because it wasn’t named, not because it’s protected by treaty. The tariffs were imposed under Section 338 of the Tariff Act of 1930, a rarely used authority that lists specific product categories rather than applying broadly — and goods that qualify under the Canada-United States-Mexico Agreement, or CUSMA, don’t get an automatic pass from Section 338 the way they typically have from other tariff actions. Space equipment simply isn’t one of the listed categories this time.
But there is nothing to say that the U.S., however unlikely as it seems now, won’t target the space sector in the future. One key holdback on targeting the space sector is defence. The U.S. and Canada have a long history of working closely together, and the now renamed U.S. Department of War is still inclined to continue that relationship.
A potential risk
A slower-moving process carries a slight risk. A U.S. Commerce Department investigation concluded in July that imported aircraft, engines and parts threaten U.S. national security, but stopped short of recommending tariffs. It gave negotiators 180 days to strike new terms, a window that runs out around January 2027. Spacecraft and satellites are not part of that investigation’s scope today. But the U.S. Commerce Department has already shown, through a standing process that adds new steel and aluminum products to an existing tariff list after the fact, that such lists can grow. Nothing currently points at space hardware, and the likelihood is very small. But if we’ve learned anything from the second Trump administration, it’s that you should plan for the unexpected, no matter how unlikely it might seem.
More SpaceQ coverage: U.S. tariffs.