Trump opens new trade clash with 50pc tariffs on Canadian imports

WASHINGTON: The United States has announced 50 per cent tariffs on nearly $20 billion worth of imports from Canada, broadening a trade dispute that Washington says stems from Canadian measures affecting American cars, alcohol and dairy products.

President Donald Trump unveiled the new duties on Monday, using Section 338 of the Tariff Act of 1930. The measure allows a US president to impose punitive tariffs of up to 50pc on countries judged to have discriminated against American goods. This appears to be the first known time the provision has been used since the law was enacted almost a century ago.

The tariffs will take effect in 30 days, on August 19. The US Trade Representative’s office said they would cover almost $20bn in Canadian imports, equivalent to about 5.2pc of the $382bn in goods the US imported from Canada in 2025, based on US Census Bureau figures. Products listed include wine, cement, ice hockey equipment, dairy items, swimming pools, furniture, fishing rods, seeds, clothing and wigs.

US Trade Representative Jamieson Greer said the move was tied to Canada’s response to earlier American tariffs and to what Washington described as unfair treatment of US exports.

"While the administration continues to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to rebalance trade and protect US industry in national-security sensitive sectors,"

Canadian Prime Minister Mark Carney said Ottawa had already put forward broad proposals to settle trade disagreements with Washington and maintained that earlier Trump tariffs breached the North American trade pact. He said the dispute had pushed up costs for households, especially in the United States.

"This trade dispute has raised costs for families, particularly in the US," Carney added. “Canada stands ready to engage intensively to address outstanding issues with the US to the mutual benefit of our citizens.”

White House complaints and exemptions

The White House cited Canada’s dairy supply management regime, which it called protectionist, as well as tariffs and quotas on American-made vehicles entering Canada that do not apply in the same way to imports from some other countries. Carney said Canada had, within its rights, matched US tariffs on the auto sector, which he said violated the US-Mexico-Canada Agreement.

Washington also pointed to the suspension of US alcohol sales in most Canadian provinces, a step taken after earlier US tariffs. The White House said imports by Canada of US motor vehicles fell 22pc over the past year, while imports of US alcoholic beverages dropped 81pc.

The new duties are to apply even if goods would otherwise qualify for exemptions under the USMCA. However, Trump excluded some major categories, including energy, potash, fish, critical minerals and items already subject to Section 232 tariffs.

Broader trade tensions

The Trump administration has repeatedly complained that Canada and China retaliated against a series of tariffs imposed since Trump returned to the White House last year. Greer has excluded Canada from the talks now under way with Mexico over changes Washington wants in the USMCA, and he is holding bilateral discussions in Mexico City this week.

When Trump met Carney at the FIFA World Cup Final in New Jersey on Sunday, he also pressed the Canadian leader to curb wildfires whose smoke has spread across parts of the United States. Last week, Trump threatened to fold the “incalculable cost” of dealing with that pollution into existing tariffs on Canadian products.

Rare legal route draws scrutiny

Section 338 is part of a 1930 law associated with sweeping US tariff increases and retaliation that economic historians say deepened the Great Depression. John Veroneau, who served as a US trade official in president George W Bush’s administration and has researched the statute extensively, said the provision was intended to ensure countries applied tariffs equally rather than favouring some trading partners over US exports.

Veroneau said some earlier presidents, including Franklin D Roosevelt, had considered using Section 338, but he found no record of any president doing so before Monday’s proclamations by Trump. He described the decision as ironic because the power was being used to answer tariffs that had themselves been imposed in reaction to US action.

"It is ironic, to say the least, to use this authority to impose tariffs to retaliate against tariffs that were imposed in response to actions taken by the US. These tariffs may be lawful under Section 338, but they at least violate the spirit of Section 338, which was to create a world where countries apply the same tariffs on the same goods to all countries," he added.

Veroneau also said Trump had moved away from that principle “in a maximalist way.” After World War Two, major economies built the most-favored-nation tariff system through the General Agreement on Tariffs and Trade to avoid a return to pre-war competitive trade restrictions and currency devaluations.

Diamond Isinger, a former senior adviser to ex-prime minister Justin Trudeau on US-Canada relations, said Carney had little room to force provinces to resume sales of American alcohol. She said provincial premiers, not the federal government, would decide whether those products are put back on shelves unless extraordinary measures are used.