ByREUTERS

JULY 21, 2026 07:16

Updated: JULY 21, 2026 07:18

US President Donald Trump introduced 50 percent duties on numerous Canadian imports on Monday, citing what officials described as unfair barriers facing American cars, alcohol and dairy items, raising the prospect of expanded global trade friction.

By targeting products that include wine, cement and ice hockey equipment, Trump relied on Section 338 of the Tariff Act of 1930, allowing punitive rates as high as 50 percent on partners judged to have discriminated against US goods, marking the first recorded application of the provision in nearly a century.

The duties, scheduled to begin in 30 days, will cover dairy goods, swimming pools, furniture, fishing rods, seeds, clothing and wigs, among additional categories.

The US Trade Representative's office indicated the measures would affect nearly 20 billion dollars of Canadian imports, representing roughly 5.2 percent of the 382 billion dollars in goods the United States purchased from Canada during 2025, based on Census Bureau figures.

"While the Administration continues to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to rebalance trade and protect US industry in national-security sensitive sectors," US Trade Representative Jamieson Greer said in a statement.

Canadian Prime Minister Mark Carney stated that his government has offered broad proposals to settle disputes with Washington, noting that earlier US tariffs breached the North American trade agreement.

"This trade dispute has raised costs for families, particularly in the US," he said. "Canada stands ready to engage intensively to address outstanding issues with the US to the mutual benefit of our citizens."

The Trump administration has repeatedly noted that Ottawa and Beijing enacted countermeasures after the wave of duties Trump sought to apply following his return to office last year.

Greer has pointedly left Canada out of negotiations underway with Mexico on changes the US wants in the USMCA. He holds bilateral talks on USMCA in Mexico City this week.

When Trump and Carney met at the FIFA World Cup Final in New Jersey on Sunday, Trump demanded that Carney take action to contain wildfires that have sent smoke billowing across swaths of the US. The US president threatened last week to add the "incalculable cost" of dealing with pollution to existing tariffs on Canadian goods.

First usage of Tariff Act

The Tariff Act of 1930 and its Section 338 are better known for massive US tariff increases and subsequent retaliation that economic historians say worsened the Great Depression of the 1930s.

Section 338 was intended to ensure countries apply tariffs equally and do not give preferential rates to some countries at the expense of US exports, said John Veroneau, a US trade official in President George W. Bush's administration who has extensively researched the statute.

He said that some presidents, including Franklin D. Roosevelt, considered imposing tariffs under Section 338, but no record could be found of any president taking such action until Trump's proclamations on Monday.

"It is ironic, to say the least, to use this authority to impose tariffs to retaliate against tariffs that were imposed in response to actions taken by the US," said Veroneau, senior counsel with the Covington and Burling law firm.

"These tariffs may be lawful under Section 338, but they at a minimum violate the spirit of Section 338, which was to create a world where countries apply the same tariffs on the same goods to all countries," he said, adding Trump has moved away from this principle "in a maximalist way."

After World War Two, major countries created the "most-favored-nation" tariff system through the General Agreement on Tariffs and Trade to try to prevent a return to the pre-war "beggar-thy-neighbor" economic policies marked by competitive trade restrictions and currency devaluations.

Trump's new levies are set to take effect on August 19 and apply regardless of whether goods qualify for tariff exemptions under the USMCA, although Trump exempted a range of key goods, including energy, potash, fish, critical minerals, and products already covered by Section 232 tariffs.

Washington cites Canada's dairy supply system as grounds for tariffs

Among the grounds for the tariffs, the White House cited Canada's "protectionist" dairy supply management system, as well as tariffs and quotas on cars imported into Canada from the US but not from other countries. Carney said that Canada "as is its right, merely matched" US tariffs on the auto sector that were in violation of the USMCA.

Washington also noted that most Canadian provinces have halted the sale of US alcohol, a move in response to prior US tariffs.

The White House said Canadian imports of US motor vehicles dropped by 22 percent and of US alcoholic beverages by 81 percent over the past year.

Diamond Isinger, a former senior adviser to former Canadian prime minister Justin Trudeau on US-Canada relations, said Carney would have limited ability to compel provinces to resume selling American alcohol.

"Unless there are some sort of extraordinary measures invoked here, the premiers of those provinces are the ones who decide whether to restock alcohol," Isinger said.