(CNN) — On Monday, President Donald Trump announced a 50% tariff on Canadian imports, marking one of the steepest duties to take effect since the Supreme Court struck down his most sweeping tariffs earlier this year.
The administration framed the move as a response to what it says is Canada’s longstanding trade barriers. But the decision sends a message to every other US trading partner: You could be next.
Ever since the Supreme Court blocked Trump’s broad tariff authority, many governments and businesses believed the risk of being hit with new tariffs had eased. But now, Trump is signaling that he may have found a way to revive them.
Trump is relying on a 1930 trade law that gives a president the power to impose tariffs of up to 50% when another country discriminates against American goods. But since the law has never been used to impose tariffs, the move could face a legal challenge.
US Trade Representative Jamieson Greer said Tuesday these tariffs are a response to Canada’s decision to retaliate against earlier US tariffs, a step that only China took. “We have a tariff, which is, again, a natural consequence of the Canadian retaliation,” Greer said in a morning interview with CNBC.
That rationale could have implications far beyond Canada. If the administration can broadly define what constitutes discrimination against American goods, it could have a new legal pathway to justify steep tariffs against countries whose policies — trade or otherwise — it opposes.
That’s exactly how the administration operated previously until the Supreme Court ruled the administration couldn’t enact higher tariffs under the guise of emergency economic powers.
Now, the administration may be testing whether the 1930 law “could be used to impose tariffs on other countries in the future,” Stephen Brown, chief economist at Capital Economics, wrote on Monday. Trade experts at the Cato Institute have previously warned the statute could be “ripe for abuse by a protectionist administration.”
“Other countries are still going to need to take such threats seriously,” said Greg Husisian, a trade attorney at Foley & Lardner. “This is confirmation that President Trump is going to continue to use the threat of tariffs to achieve foreign policy ends for the rest of his presidency.”
Trump’s latest threat also breaks with recent history in that goods complying with the US-Mexico-Canada Agreement are mostly shielded from new tariffs. For other countries it may mean that their standing trade agreements could be brushed aside just as easily.
Ultimately, the stakes extend beyond trade negotiations and court battles. If these tariffs take effect on August 19 as planned, Americans could once again feel the impact through higher prices — at a time when many are already feeling the strain of rising energy costs and other everyday necessities.
The-CNN-Wire
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