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.
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.”
“While this is a regrettable escalation by the U.S. Administration, we now have 30 days before this comes into effect,” she said, in a statement. “Both sides need to use this window to make meaningful progress in advancing formal talks.”
Trump’s trade action comes just a few days after he threatened new tariffs on Canada after smoke from Canadian wildfires blanketed U.S. skies.
Prime Minister Mark Carney was in New Jersey on Sunday for the FIFA World Cup final game, where he met with Trump and Mexican President Claudia Sheinbaum. All three of them congratulated each other on a successful event, according to a statement provided by the Prime Minister’s Office.
Members of the U.S. administration, including U.S. Secretary of Commerce Howard Lutnick and U.S. Trade Representative Jamieson Greer, have expressed their opposition to the boycott of U.S. alcoholic products by provincial liquor commissions in every province except Saskatchewan and Alberta.
In a statement on Monday, Greer said Trump took decisive action to hold Canada accountable for its retaliation and discriminatory trade actions.
“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 U.S. industry in national-security sensitive sectors,” said Greer. “Specifically, Canada has taken U.S. alcohol products off Canadian shelves, given better market access to dairy products from the European Union, and has put a cap on U.S. vehicle exports to Canada from companies reshoring to the United States.”
The federal government has said that any decision to reverse the alcohol bans remains with the provinces.
Between March 2025 to February 2026, Canadian imports of U.S. alcohol have decreased by 81 per cent, or the equivalent of U.S.$582 million, compared to the year before, according to the White House fact sheet. The U.S. administration also takes issue with the drop in U.S. auto imports to Canada, which have decreased by 22 per cent from April 2025 to March 2026.
Wendy Wagner, head of international trade and customs regulatory group at legal firm Gowling WLG, said it is “pretty clear” that the Trump administration was looking for different means with which to pressure its trading partners after the Supreme Court in February struck down the tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Wagner said Section 338 appears to leave more discretion in the hands of the administration, versus having to get approval or authorization from the U.S. Congress.
“It’s pretty clear why this mechanism is being used because it appears to not have those same procedural steps that need to be taken for some of the other trade actions that they have at their disposal,” she said. “It’s just a kind of a IEEPA substitute.”
This new 50 per cent tariff is “clearly a pressure tactic” to squeeze more concessions out of Canada, she said.
“I mean, this is a consistent pattern of the Trump administration in terms of how it’s dealing with trading partners because basically it’s this transactional model. So, if you want access to the U.S. market, then we are going to provide our demands to you, and if you don’t accede to them, then you won’t have access to the U.S. market.”
Wagner said many questions remain as to the exact list of products that will be subject to this new tariff and the specific rate that will be applied to each of these products.
In any case, she said it is a difficult situation for the federal government to manage.
“Do we just sit back and allow the U.S. to impose those very damaging unilateral measures, but not respond because that’s basically what we’re being asked to do? We can undertake any tariff measures that we find appropriate, but if (we) retaliate, we’ll just up the ante,” she said.
At the end of the day, she said while an “emotional response” such as retaliation against the U.S. sounds attractive, it could be really damaging to the Canadian economy. “I think that’s the calculation that has to be made.”
National Post
With files from Catherine Lévesque
Editor’s note: Due to an editing error, a previous version of this story included some items subject to the new tariff that were not specifically mentioned in the White House announcement. The story has been updated.
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