Washington: The United States has banned nearly $1 billion worth of Canadian imports, effective 12:01 a.m. Eastern time on Tuesday. Here is what happened and why it matters.

What was banned: alcoholic beverages, dairy products including whey, motor vehicles and motorcycles. The ban covers about $967 million in goods, 87 per cent of it alcohol.

Why: The dispute began on July 20, when President Donald Trump used a 1930s-era law to impose 50 per cent tariffs on about $20 billion of Canadian goods, accusing Canada of discriminating against US producers. Canada hit back on September 8 with matching tariffs on C$27.6 billion of American goods. Trump then converted the 50 per cent duties into outright bans as punishment for the retaliation.

The backstory: Washington targeted alcohol after Canadian provinces pulled American liquor from shelves. Dairy has been a long fight over Canada's quota system that shields its farmers.

What it means: the economic impact is small — the 50 per cent tariffs had already made these imports uneconomical, and annual two-way trade is worth $880 billion. Symbolically, it is a sharp escalation, and Trump has threatened 50 per cent tariffs on all Canadian vehicles and steel from January 1, 2027.