Trump hits closest ally Canada with 50% tariffs, citing retaliation against US goods

President Donald Trump on Monday moved to impose sweeping additional tariffs on Canada, one of America's closest allies, in a move widely seen as a pressure tactic ahead of upcoming renegotiations of the United States-Mexico-Canada Agreement.

According to the White House, Trump signed three proclamations Monday imposing 50% additional tariffs on select Canadian products.

The legal basis for the tariffs is Section 338 of the Tariff Act of 1930. Trump cited Canada's allegedly discriminatory treatment of American goods as justification.

Bloomberg reported that Section 338 allows the president to impose tariffs of up to 50% on countries that discriminate against US trade, and that this marks the first time the provision has been invoked to impose tariffs.

The new tariffs take effect in 30 days. The White House listed wine, hockey sticks and cement among the targeted goods.

Items that had previously enjoyed duty-free status under the USMCA will also be subject to the tariffs. However, goods already covered by separate tariffs under Section 232 of the Trade Expansion Act — including energy, seafood and critical minerals — are excluded.

The Associated Press reported that in effect nearly all Canadian products would be subject to the 50% additional tariff. The US Trade Representative said the targeted imports amount to roughly $20 billion.

The Trump administration said the measures were a direct response to Canada's discriminatory treatment of American goods.

The administration cited data showing Canadian imports of American automobiles fell 22 percent year-on-year in the year from April last year, and that Canadian imports of American alcohol dropped 81 percent year-on-year in the year from March last year. Both declines were attributed to Canadian tariffs and bans on the sale of US products.

A senior administration official said at a briefing that Canada is one of the few countries, aside from China, to have retaliated against Trump's tariffs, and must be held accountable.

Some analysts interpret the move as an effort to strengthen Washington's negotiating hand ahead of follow-on USMCA talks.

The Trump administration earlier this month rejected an immediate renewal of the USMCA, announcing plans to review the agreement annually for up to 10 years. The preemptive tariff action may be intended to extract the most favorable terms possible from the negotiations that follow.

The 30-day grace period before the tariffs take effect lends further weight to that interpretation. Trump has previously threatened steep tariffs to pressure trading partners, only to later back down.

Trump had also hinted at additional tariffs on Friday, citing Canadian wildfires that blanketed parts of the eastern United States in smoke. A senior administration official later clarified that the new measures are unrelated to the wildfires.

The tariffs are expected to sharply escalate tensions between the United States and Canada. The two neighbors have long been among each other's closest allies, but friction has mounted steadily since Trump took office.

mokiya@heraldcorp.com