The US Ban on Canadian Imports: What's Actually Covered 

For businesses, this creates an increasingly complicated trading environment. A company importing from Canada has to consider not just whether a product is Canadian, but also which tariff line applies, when the shipment entered the country, whether another tariff applies and whether the product is covered by one of the new exclusions.

The speed at which the policies have changed also makes planning difficult. A company that signed a supply contract months ago may now have to reconsider its costs and delivery arrangements because the rules governing the shipment have changed.

What could happen to prices and supply?

The American Action Forum estimates the banned goods at around $19.9 billion in annual Canadian imports, as reported by CNBC. Since most of the listed lines are alcohol, Canadian whisky and beer are likely to get scarce or pricier first. Food makers that buy whey or molasses from Canada will need new suppliers, and products with few alternatives will be hardest to replace.

For alcohol, the effect could be especially noticeable because Canadian brands have established distribution networks in the United States. If a particular brand cannot replace its Canadian supply quickly, retailers may have fewer options.

But higher prices are not guaranteed for every affected product. Retailers may have existing inventory, suppliers may find alternative production or distribution arrangements, and consumers may switch to products made in the United States or other countries.

The situation could be more challenging for manufacturers that use Canadian ingredients. Whey, for example, is used in a wide range of food and nutrition products. If a company has built its production process around a particular Canadian supplier, changing suppliers may involve more than simply buying the same ingredient somewhere else. The company may have to qualify a new supplier, test the material and make sure the new ingredient meets its production requirements.

Molasses can present a similar problem for companies that use it as an ingredient or industrial input. If alternative supplies are more expensive or harder to obtain, those additional costs can eventually work their way through the supply chain.

Smaller businesses could feel the impact more strongly because they may have fewer suppliers and less purchasing power than large companies. A major retailer might be able to negotiate with several suppliers in different countries, while a small importer may depend heavily on one Canadian producer.

What happens next?

None of this is necessarily permanent. The list could change through new proclamations, updates to the tariff schedule or a deal between the two countries, and CNBC reports that officials have sent mixed signals about whether talks will resume. Importers should check current US Customs and Border Protection guidance and the annexes to the proclamations before making decisions.