New Tariffs on Canadian Goods Introduced by Trump

WASHINGTON – President Donald Trump has reached back to the Great Depression for an obscure trade weapon he can use to wallop Canada again.

Trump on Monday announced 50% tariffs on some Canadian products, ratcheting up tensions with one of the closest U. S. allies.

The move threatens to push prices higher at a time when Americans are already frustrated with the high cost of living ahead of the Nov. 3 midterm elections. It’s also unclear whether Trump’s latest tariffs would survive a legal challenge.

Tariffs are taxes on foreign products. They’re paid by importers in the United States who often pass the costs along to consumers in the form of higher prices.

Trump punishes Canada for its retaliatory tariffs

Trump invoked Section 338 of the Tariff Act of 1930 to impose 50% tariffs on Canadian products ranging from hockey sticks to beer.

In proclamations issued Monday, Trump claimed that Canada discriminates against American exports of autos, alcohol and cheese. He is angry over Canada’s retaliation against his own tariffs last year, which were imposed under the pretext that Canada should do more to stop fentanyl smuggling.

The president has repeatedly sparred with his northern neighbor, declaring that Canada should be the 51st U. S. state and threatening tariffs over wildfires that have sent heavy smoke wafting over to the United States. His taunts, threats and trade sanctions have enraged Canadians and led to boycotts of American goods. Most Canadian provinces, for instance, have banned the sale of alcoholic beverages from the United States.

The U. S. is renegotiating a trade pact – the US-Mexico-Canada Agreement. And the threat of Section 338 tariffs, set to take effect Aug. 19, gives the United States leverage to seek concessions from Ottawa.

Section 338 is ‘completely untested’

Nearly a century ago, with the U. S. and world economies in collapse, Congress passed the Tariff Act of 1930, imposing hefty taxes on imports. Known as the Smoot-Hawley tariffs, they are notorious among economists and historians for limiting world commerce and making the Great Depression worse. They made a memorable cameo in the 1986 movie “Ferris Bueller’s Day Off.”

Section 338 of the law authorizes the president to impose tariffs of up to 50% on imports from countries that have discriminated against U. S. businesses. No investigation is required. Nor is there any limit on how long the tariffs can stay in place.

Section 338 tariffs have never been imposed. U. S. trade negotiators traditionally have favored another tool, Section 301 of the Trade Act of 1974 – though the United States used the threat of Section 338 levies as a bargaining chip in trade talks in the 1930s.

“It’s completely untested,” said trade lawyer Ryan Majerus, a partner at King & Spalding and a former U. S. trade official. “It’s kind of hard to believe it’s been on the books for 100 years.’’

Tariffs could hurt Canada more than US

Canada is America’s second-biggest trading partner behind Mexico. The United States last year imported $389 billion worth of goods from Canada – led by crude oil and autos – behind only $541 billion taken in from Mexico. Canada depends heavily on its market: Nearly 72% of Canadian goods exports went to America last year, down from almost 76% in 2024 according to government data.

Still, Stephen Brown, chief North America economist at Capital Economics estimates that these Section 338 tariffs will affect only $20 billion worth of Canadian imports overall. As such they “will not have any major implications for U. S (economic) growth or inflation … The consequences for Canada will be greater but manageable.”

Brown believes that these levies would raise rates on Canadian imports into America from about 3.1% up to roughly around 5.6%.

How these new tariffs will impact American consumers

A number of top imports aren’t included under these new additional duties; energy products are left out along with vehicles already facing other tariff charges as well. But many items like building materials such as cement or wood and food items like dairy or honey will see this tax applied.

In prior instances , Trump often exempted certain things subject through duty-free status linked back under USMCA agreements he finalized during his first term. However , this announcement did not spare those compliant products either.

“Anything that got exempted before is basically going to be covered now,” said Barry Appleton , a law professor and co-director New York Law School’s Center for International Law. “So where American consumers were shielded from costs earlier because exemptions existed , now they’ll feel them.”

This means even more strain hits consumer budgets during tough economic times experts claim. Back then it was reported that in just one year alone , households faced extra expenses averaging close towards $1 ,000 according nonprofit Tax Foundation reports.

“Even with significant carve-outs still looming large above you’re really gonna impact quite an amount out there,” stressed Greg Husisian partner overseeing international practice within firm Foley & Lardner’s department focusing national security matters “

How these moves fit into Trump’s broader policy agenda

The announcements rolled out come right alongside current shifts happening within Trump’s overall approach towards international trading practices built largely upon utilizing tougher penalties wherever possible.

Last year saw him imposing steep fees onto virtually all imported goods arriving here around globe citing historic economic deficits requiring urgent attention needed right away declaring them emergencies affecting national interests directly involved.”

However just this past February Supreme Court ruled those measures unconstitutional stating he’d exceeded presidential power when implementing them leading refunds being processed back toward affected companies who had paid through IEEPA regulations previously established.

Now trying rebuilding walls keeping economy secure turning focus instead Sections outlined originally under Trade Act modified allowing imposition anywhere globally capping rates nearby fifteen percent lasting up hundred fifty days maximum duration allowed bringing forth new round ten percent added across board yet soon due expiration coming Friday next week!

Indications show expect replacement implement newer variations marked through section three oh-one still pending results coming down pipeline soon thereafter!

Legal battles likely surrounding Section three thirty-eight rules challenged

“The legal case surrounding section three thirty-eight appears weaker compared IEEPA,” stated Majerus adding there’s significant potential risk overturn ruling could occur anytime soon!”

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