US President Donald Trump on Monday announced new 50 per cent tariffs on a broad range of Canadian imports worth nearly $20 billion, accusing Ottawa of discriminating against American-made automobiles, alcohol and dairy products and escalating trade tensions between the two neighbours.
The tariffs, covering products from wine and cement to ice hockey equipment, were imposed under Section 338 of the Tariff Act of 1930, which allows the US president to levy punitive duties of up to 50pc on countries deemed to have unfairly treated American goods.
The move marks the first known use of the provision since the law was enacted nearly a century ago.
The tariffs, scheduled to take effect in 30 days, will also cover dairy products, furniture, swimming pools, fishing rods, seeds, clothing, wigs and several other goods.
According to the Office of the US Trade Representative, the measures will affect almost $20bn worth of Canadian exports to the United States, representing around 5.2pc of the $382bn in goods the US imported from Canada in 2025, based on US Census Bureau figures.
“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,” US Trade Representative Jamieson Greer said in a statement.
Canadian Prime Minister Mark Carney responded by saying Ottawa had put forward comprehensive proposals to settle trade disagreements with Washington, arguing that Trump’s earlier tariffs violated the North American trade agreement.
“This trade dispute has raised costs for families, particularly in the US,” he said. “Canada stands ready to engage intensively to address outstanding issues with the US to the mutual benefit of our citizens.”
The Trump administration has repeatedly criticised Canada and China for imposing retaliatory measures in response to tariffs introduced since Trump returned to office last year.
Greer has also excluded Canada from ongoing discussions with Mexico over changes Washington wants to make to the US-Mexico-Canada Agreement (USMCA). He is holding bilateral trade talks in Mexico City this week.
When Trump met Carney during the FIFA World Cup final in New Jersey on Sunday, he also urged the Canadian leader to address wildfires whose smoke has spread across parts of the United States.
Last week, Trump warned that the “incalculable cost” of dealing with the resulting pollution could be added to existing tariffs on Canadian goods.
First use of Section 338
The Tariff Act of 1930, particularly Section 338, is best known for the sweeping tariff increases that economists say contributed to worsening the Great Depression after triggering retaliatory trade measures.
The provision was originally designed to prevent countries from applying preferential tariffs to some trading partners while disadvantaging US exports, according to John Veroneau, a former US trade official under President George W Bush who has studied the statute extensively.
Veroneau said several presidents, including Franklin D Roosevelt, had considered using Section 338, but there is no record of any administration invoking it before Trump’s action on Monday.
“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,” said Veroneau, now senior counsel at Covington and Burling.
“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 said, adding Trump has moved away from this principle “in a maximalist way.”
Following World War II, major economies established the “most-favored-nation” system through the General Agreement on Tariffs and Trade (GATT) to discourage the protectionist trade practices that had characterised the pre-war era.
The new US tariffs will take effect on August 19 and will apply even to goods that qualify for exemptions under the USMCA. However, Trump excluded several key products, including energy, potash, fish, critical minerals and items already subject to Section 232 tariffs.
The White House justified the tariffs by citing Canada’s dairy supply management system, as well as tariffs and quotas imposed on US-made vehicles while allowing more favourable treatment for imports from other countries.
Carney rejected the claim, saying Canada “as is its right, merely matched” US tariffs on the auto sector that were imposed in violation of the USMCA.
Washington also criticised Canadian provinces for suspending sales of US alcoholic beverages in response to earlier American tariffs.
The White House said imports of US-made motor vehicles into Canada had fallen by 22pc over the past year, while imports of American alcoholic beverages had dropped by 81pc.
Diamond Isinger, a former senior adviser to ex-Canadian prime minister Justin Trudeau on US-Canada relations, said Carney had limited authority to force provinces to resume sales of American alcohol.
“Unless there are some sort of extraordinary measures invoked here, the premiers of those provinces are the ones who decide whether to restock alcohol,” Isinger said.
