Trump risks reigniting a trade war with new tariffs on Canada
(CNN) — President Donald Trump on Monday announced sweeping tariffs against Canada, threatening to reignite a trade battle with one of America’s closest allies and top economic partners.
The 50% tariffs on certain Canadian goods, including electrical equipment and machinery, are among the steepest tariffs his administration has levied against any country.
Although the president has recently threatened tariffs against America’s neighbor in retaliation for wildfire smoke that poured into the northern part of the United States, administration officials said that the latest tariffs are unrelated.
The levies take effect in 30 days, covering about $20 billion of Canadian goods, the White House said.
Canadian Prime Minister Mark Carney said the country “believes in the benefits of free and fair trade,” in a statement on Monday.
“In all circumstances, Canada will work relentlessly and take any measures necessary to build our strength at home and to support Canadian workers, farmers, businesses, and families,” Carney said.
But Ontario Premier Doug Ford went further, immediately encouraging Canada to retaliate.
“If these tariffs proceed, Canada should respond tariff for tariff, dollar for dollar,” Ford said in a post on X.
Trump cited Section 338 of the Tariff Act of 1930, a law that allows a president to set tariffs up to 50% when another country discriminates against American goods. However, the law has never been applied this way.
Excluded from the latest round of tariffs are several key Canadian imports, including energy products, critical minerals, fish and other goods that are subject to industry-specific duties, such as cars and metals.
However, unlike other levies Trump has enacted against Canada, there will be no carve-outs for goods covered by the trade pact known as the United-States-Mexico-Canada Agreement, which is currently under negotiation.
The Canadian Trucking Alliance, an industry group, warned of higher costs for consumers and urged the United States and Canada to negotiate. “You cannot disrupt the world’s most integrated supply chain without massive collateral damage,” CEO Stephen Laskowski said in a statement shared with CNN. “These tariffs will immediately spike freight costs, create severe border bottlenecks, and hurt consumers in both nations.”
A potential new trade tool
According to research firm Capital Economics, only about 5% of Canadian imports would be affected by the new tariffs — or about 0.6% of total US imports.
Still, if Trump’s use of Section 338 is upheld by the courts, it could become a useful tool in future trade negotiations, said Stephen Brown, chief North America economist at Capital Economics.
“Taking a step back, it’s striking that the Trump administration is now reaching to a new method to implement tariffs,” Brown wrote in a research note Monday.
Tariffs have become one of Trump’s go-to economic negotiation tactics, which he has attempted to levy against every major US trade partner during his latest term.
However, the Supreme Court ruled in February that the president could not use the International Emergency Economic Powers Act, or IEEPA, to implement sweeping tariffs globally. The decision negated Trump’s attempt to tax imports from every country and additional punitive tariffs on China, Canada and Mexico.
Instead, Trump imposed temporary, across-the-board 10% tariffs under Section 122 of the Trade Act of 1974, which are set to expire later this week.
Last week, the US announced a new 25% tariff on many Brazilian imports under Section 301, following a yearlong investigation into Brazil’s trade policies that it said it found to be unfair.
The US has also previously threatened to impose more tariffs on China, its primary economic rival in global trade, which is already facing much steeper tariffs than other nations. Though tariffs went undiscussed during a summit between Trump and Chinese leader Xi Jinping in May, Xi is expected to visit the US in September.
In its statement Monday, the White House emphasized that Canada was one of two countries that had chosen to retaliate against US tariffs rather than negotiate— the other country being China.
This story has been updated with additional information.
The-CNN-Wire
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