The action threatens to further strain relations between the two neighbours, who have traditionally been close allies. (James Macdonald/Bloomberg)
key takeaways:
- The Trump administration imposed a new 50% tariff on certain Canadian goods on July 20 under Section 338 of the 1930 Tariff Act.
- Officials said the action was taken in response to Canada’s treatment of U.S. wine, auto and dairy products and does not include energy, potash, fish and critical minerals.
- The tariffs go into effect in 30 days without a USMCA waiver, potentially deepening trade tensions as broader negotiations remain unresolved.
The Trump administration is set to impose new 50% tariffs on some Canadian goods under a never-before-used legal provision that says American wine, automobiles and dairy products are being treated unfairly by Ottawa.
The new tariffs will take effect in 30 days, according to a senior administration official who briefed reporters on the decision on July 20. Some key imports such as energy, potash, fish, critical minerals and items covered by separate regional tariffs on industries including auto and metals will be excluded.
Importantly, the official said there will be no exemptions for products under the existing North American trade agreement between the US, Canada and Mexico. President Donald Trump signed a proclamation ordering the tariffs as early as July 20, the official said.
Trump has previously threatened to impose tariffs on other countries’ goods, but has walked back some of them after negotiations or negative market outcomes.
The tariffs are being implemented under Section 338 of the 1930 Tariff Act, which gives the President the power to impose tariffs of up to 50% on countries that discriminate against American commerce. This provision had never been used before to impose tariffs.
Connected: Trump’s Section 122 tariffs expire on July 24: Then what?
The July 20 action threatens to further strain relations between the two neighbours, who have traditionally been close allies.
Trump last week threatened to raise tariffs on Canadian products to punish the country for wildfire smoke that blanketed US cities including New York and Washington. The senior administration official said the US is still exploring options related to Trump’s threat, but the July 20 action is not related to the wildfires.
Further complicating trade relations between the two countries, the US earlier this month declined to extend its trade agreement with Canada and Mexico, known as USMCA, which could lead to years of contentious negotiations.
