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U.S. President Donald Trump has imposed 50% tariffs on many key Canadian-made goods in retaliation for what he called “discriminatory treatment of American products” such as cars, dairy, and alcohol.
The new tariffs apply to a wide range of products, including raw agricultural and natural materials, wood products, paper, chemicals, textiles, consumer goods, machinery, and tools, among many other things (the full list is here).
A Punishment For Canada’s Retaliation On Trump’s Previous Tariffs
The move is described by experts as potentially disruptive for Canada’s economy, which is deeply intertwined with the U.S. economy as America is its largest trading partner and the destination for about 75% of Canadian exports.
According to the White House, Canada was one of the only nations other than China that retaliated against Trump’s previous tariffs, which is why it must be held accountable, one administration official said, according to AP News.
The move risks further damaging the relations between the two neighboring countries which have been involved in a year-long trade war.
In a fact sheet posted on the White House’s official website, the U.S. administration said that by imposing the new tariffs, “President Trump is offsetting the burden and disadvantage on U.S. commerce from Canada’s discriminatory treatment of U.S. commerce and is leveling the playing field for crucial American exports—cars, alcohol, and dairy.”
Goods Covered By USMCA Are Not Exempt From The New Tariffs
The new 50% tariffs will be imposed under Section 338 of the Tariff Act of 1930, regardless of whether a good originates under the U.S.-Mexico-Canada Agreement (USMCA). As a reminder, the U.S. did not agree to renew the USMCA trade deal before the July 1 deadline, describing the deal as “not sufficiently beneficial for the United States.” This will trigger a new set of negotiations that could run until 2036.
Section 338 empowers the U.S. President to impose tariffs “when a country disadvantages U.S. exporters relative to the exports of another country to offset the disadvantage or burden on U.S. commerce,” reads the fact sheet.
The new tariffs will take effect on August 19, 2026, which gives Canada time to try and reach an agreement. Prime Minister Mark Carney said he and Donald Trump agreed to “intensify” talks in a bid to calm trade growing tensions between their countries. In the past, Trump has not always followed through on his announced tax hikes on imported goods.