Trump announces new 50% tariff on Canadian goods citing alcohol, dairy disputes

U.S. President Donald Trump signed an executive order on Monday to impose new 50 per cent tariffs on certain Canadian goods set to begin Aug. 19, including goods previously exempted under the Canada-United-States-Mexico Agreement (CUSMA).

The tariff is in response to what the U.S. administration views as discriminatory trade practices by Canada, including Canadian tariffs on American autos, U.S. alcohol bans in some provinces and dairy import limits.

“Today, President Donald J. Trump signed three Proclamations pursuant to Section 338 of the Tariff Act of 1930 to impose additional 50% tariffs on certain goods of Canada in response to Canada’s discriminatory treatment of American products,” reads a release on the White House website. “By doing so, President Trump is offsetting the burden and disadvantage on U.S. commerce from Canada’s discriminatory treatment of U.S. commerce and is leveling the playing field for crucial American exports—cars, alcohol, and dairy.”

Trump used Section 338 of the Tariff Act of 1930, which allows a president to impose duties up to 50 per cent on a foreign country that discriminates against U.S. commerce.

The Canadian products subject to the new tariff include paper products; cement; wood products; dairy, honey, essential oils, hockey equipment and several alcoholic beverages.

According to the White House release, the Section 338 tariff will “not apply to energy, potash, products subject to tariffs under Section 232, and certain other goods, such as fish or critical minerals.” Section 232 tariffs currently apply to Canadian steel, aluminum, and copper as well as pharmaceutical products.

Reacting to the news Monday evening, Prime Minister Mark Carney said this 50 per cent tariff is “the latest in a series of unilateral U.S. trade actions that began with the U.S. imposing a series of tariffs in direct violation” of CUSMA. Those included tariffs on the Canadian auto sector, and he said “Canada, as is its right, has merely matched those measures.”

Carney said Canada has made a series of detailed and comprehensive proposals to modernize CUSMA and that his team stands ready to “intensify those discussions in the coming weeks.”

“This trade dispute has raised costs for families, particularly in the U.S.,” he continued. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens.”

“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.”

Candace Laing, president and CEO of the Canadian Chamber of Commerce, said her organization had shared its concerns with the federal government with regard to “the rising threat Section 338 tariffs pose.”