Trump Orders 50% Tariffs on Canadian Goods, Raising Fears of Trade Escalation

US President Donald Trump on Monday signed orders imposing new 50-percent tariffs on a wide range of Canadian goods, accusing Ottawa of “discriminatory treatment” against American alcohol, automobiles and dairy products.

The tariffs are set to take effect in 30 days and will cover products including wine, hockey sticks and cement, according to the White House.

Trump, whose several tariff measures were struck down by the US Supreme Court this year, has invoked an untested provision of the 1930 Tariff Act, Section 338, to impose the new duties.

The latest tariffs will exclude energy, potash and goods already subject to sector-specific duties. However, they will also apply to products covered by the United States-Mexico-Canada Agreement (USMCA), potentially putting further pressure on the North American trade relationship.

In response, Canadian Prime Minister Mark Carney said Ottawa was prepared to “intensify” negotiations with Washington and had already presented proposals to resolve disputes and modernize the USMCA.

“This is the latest in a series of unilateral US trade actions that began with the US imposing a series of tariffs in direct violation of the Canada-United States-Mexico Agreement,” Carney said.

“Canada, as is its right, has merely matched those measures,” he added.

The announcement has also raised concerns among businesses over the possibility of further retaliation and an escalating trade dispute.

Since returning to the presidency last year, Trump has imposed tariffs on several US trading partners. However, previous measures often exempted goods entering the United States under the USMCA.

The latest decision could further strain relations with Canada, the United States’ second-largest trading partner. It comes just days after Trump threatened to impose additional tariffs on Canada over wildfire smoke that had drifted into the United States.

The White House said Canada was one of two countries, along with China, that had retaliated against Trump's sweeping tariffs imposed since 2025.

Washington also criticized Canada's decision to remove US alcohol products from store shelves in several provinces, provide greater market access to dairy products from the European Union and limit US vehicle exports from companies relocating production to the United States.

“Canada has taken US alcohol products off Canadian shelves, given better market access to dairy products from the European Union, and has put a cap on US vehicle exports to Canada from companies reshoring to the United States,” US Trade Representative Jamieson Greer said.

He said the new tariffs were intended to “hold Canada accountable for its retaliation and discrimination.”

## Seeking Leverage in Trade Talks

Trump's move marks the first known use of Section 338 to impose tariffs, according to Scott Lincicome of the libertarian Cato Institute.

Many experts believe the provision may have been superseded by other trade authorities, Lincicome said, arguing that Trump has shown a willingness to use “any statute on the books.”

Ryan Majerus, a former US trade official, said the law faced “a lot of litigation risk” because it had never been tested in court.

“This is clearly designed to get some leverage over Canada,” said Majerus, now a partner at King & Spalding.

He noted that negotiations over the USMCA are continuing, while talks between the United States and Mexico have progressed more quickly than those with Canada.

“This could be an effort to try to get them going,” he said, pointing to the 30-day delay before the tariffs take effect.

However, if the measures are implemented as announced, Majerus warned that removing exemptions for USMCA imports could have significant economic consequences.

## Businesses Warn of Retaliation

Chris Swonger, president of the Distilled Spirits Council of the United States, said the US alcohol industry welcomed Washington's concerns over Canada's restrictions.

“However, we had hoped that this issue could be resolved without further escalation,” Swonger said.

He warned that steep tariffs could trigger further retaliation at a time when many US hospitality businesses are already facing financial difficulties.

Lincicome also questioned Washington's claims of discrimination over Canadian dairy policies, describing the argument as “dubious” because it relates to the terms of Canada's trade agreement with the European Union.

While the tariffs could face legal challenges, he said uncertainty could persist for some time.

“It's not a guarantee that a court will strike this down and even if they do, it'll take a little while,” Lincicome said. “In the meantime, there's just a massive amount of uncertainty.”