The US is banning a slew of Canadian products, including alcoholic spirits, dairy goods and motorbikes, as its neighbour's retaliatory tariffs on American goods come into force.
In a series of executive orders on Tuesday, President Donald Trump said Canada is "discriminating" against the US and outlined the import bans, which will begin on 29 September.
Earlier on Tuesday, Canada's Prime Minister Mark Carney said in a video address that his country's move away from the US as its largest trading partner "will come at a cost".
Both US and Canadian officials have said they would like to strike a trade deal, but no new talks have been scheduled since negotiations collapsed in late August.
The BBC has contacted Carney's office for comment.
The White House's new sanctions are the latest strike in a months-long trade war between the US and Canada. The two countries have historically been close allies, with each a key business partner to the other.
Generally more than two-thirds of Canada's total exports go to its neighbour.
On the other hand, Canada is the second-largest trading partner of the US, after Mexico, although its exports are far more diversified.
Business owners on both sides of the border have expressed fears over the trade war's fallout. Many expect prices of goods to rise and the number of customers to fall.
Last month, the White House imposed 50% tariffs on around $20bn (£14.8bn) of Canadian goods after several rounds of talks had broken down.
Those tariffs hit sectors including Canada's furniture and wine industries, as well as some sporting and fishing equipment businesses.
Canada responded with dollar-for-dollar tariffs on US goods like steel, clothing and furniture. The counter-duties came into effect after midnight on Tuesday.
Canada is "discriminating" against US businesses by restricting American goods while not doing the same to the same products from other countries, the White House said when announcing the new import restrictions on Tuesday.
Some products, like whey and non-alcoholic beer, have been banned from import entirely, while tariffs have been further hiked for others, including cheeses and motorboats.
Washington has targeted "significant industries" for Canada, including its politically influential dairy businesses, said economics lecturer Scott French from the University of New South Wales in Australia.
Trump has previously argued that Canada's system - which has production quotas, set pricing, and import limits on dairy, eggs, and poultry - is unreasonable to US farmers.
The import bans and new tariffs will also put Canada's leaders under more pressure to resist Trump's demands for concessions, French said.
The trade war will be "costly for both sides due to the historical level of integration of the North American economy," he said, adding that consumers on both sides will end up as "the biggest losers".
On Monday, Trump hinted at more trade restrictions to come, warning Canadian aircraft company Bombardier that it would no longer be able to sell its products in the US unless it moves manufacturing there.
Trump has long believed that tariffs will help reduce trade imbalances between the US and other countries, but his wide-ranging levies have upset many of the States' traditional allies.
Some Canadians have led a massive boycott of US products like alcohol, which have vanished from some store shelves after Trump launched his global tariff campaign last year.
Trade expert Deborah Elms, from the Hinrich Foundation, told the BBC the import ban could have a "strong" impact on any Canadian business with US buyers, though early estimates show a "modest impact" affecting around $1bn worth of goods.
Canada will likely "hold course for now" and adjust their business support measures to account for the US' latest moves, Elms said.
"The bigger question is what it will take for the two sides to sit back down together. The language in these proclamations, as an example, isn't helpful in getting to the negotiating table," she added.
