Trump’s tariff walls loom for Canada, Brazil, Spain
As Donald Trump’s latest attempt to rebuild the tariff wall struck down by the US Supreme Court earlier this year is being rolled out, he already plans to raise it even higher.
This week was always going to be a big one for global trade, given that Trump’s temporary “Emancipation Day” tariffs (basic 10 percent tariffs on nearly all imports to the U.S. that the Supreme Court ruled illegal in February) were scheduled to expire on Friday.
These substitute tariffs, using Section 122 of the Trade Act, have themselves been declared illegal by U.S. courts, and the proceeds may have to be repaid. In any case, they can be applied for a maximum of 150 days.
That period ends Friday, and the Trump administration is racing to make a more permanent change before the deadline.
Last month, using a more robust section of the Trade Act, Section 301 (albeit challengeable in the courts), the administration announced it would impose new tariffs of 10 percent or 12.5 percent on 99.4 percent of all imports to the United States, using the excuse that it was in response to inadequate efforts by its trading partners, including Australia, to curb imports made through forced labor.
Separately, it identified 16 of America’s largest trading partners, including China, Japan, the European Union, India and South Korea, as potential targets for higher tariffs, arguing that they have excess manufacturing capacity and production that burdens or restricts U.S. trade.
Trump’s frantic actions on trade last week show how committed he is to his misunderstood trade mentality.
Last Friday, Trump announced even more tariffs. This time in BrazilWith Secretary of State in retaliation for “unfair” trade practices Marco Rubio says Brazil is not negotiating in good faith and that President Luiz Inácio Lula da Silva “put his own ego before making a deal,” which is a bit rich coming from the Trump administration.
Trump had initially hit Brazil with 50 percent tariffs in retaliation for the prosecution of former Brazilian President Jair Bolsonaro, a Trump friend and ally whose style mirrors Trump’s. These were eliminated by the Supreme Court.
It reveals that the latest tariffs will cover only a third of Brazil’s exports to the United States, exempting coffee, orange juice, beef, hazelnuts, honey, tropical fruits, iron and manganese ore, wood pulp, oil and petroleum products, and civilian aircraft, among a long list of products, and shows the limits of Trump’s trade wars.
While the initial tariffs were in effect, they caused the prices of coffee and other groceries to skyrocket in America, provoking consumer backlash. Management is clearly trying to prevent a repeat of this experience.
There are some things that the US cannot or cannot produce on its own, cannot produce enough to meet domestic demand, or that other countries can produce more cheaply; These are things Trump has consistently failed to recognize in his trade wars with the rest of the world.
As if Monday’s imminent entry into force of Section 301 tariffs and a renewed but relatively limited attack on Brazilian exports weren’t enough Trump announces new 50 percent tariffs on CanadaIt will come into force within 30 days.
These tariffs are allegedly in response to actions by Canadian provinces to halt purchases of American alcohol, impose tariffs on US cars, and discriminate against US dairy products.
But Trump is still fuming over the fact that Canada was one of only two countries (the other being China) to retaliate when he imposed Independence Day tariffs.
Last week, he even threatened another tariff as wildfires in Canada have led to the US being “infested” by smog and pollution, saying the cost of “pollution” should be added to existing tariffs. He seems to have overlooked the fact that Canada has issued its own air quality alerts due to smoke from wildfires in the US.
Trump’s latest tariffs will apply to a wide range of Canadian exports, including those that qualify as exports. United States-Mexico-Canada Agreement (USMCA). In previous rounds of tariffs, goods complying with the free trade agreement were exempt.
Trump has, of course, declared that the United States will exit USMCA (which it negotiated in 2018) when it expires in ten years, unless Mexico and Canada negotiate a new agreement more favorable to the United States.
The third round of talks with Mexico is planned for this week. So far, Canada has not had a serious relationship with the United States.
Although Prime Minister Mark Carney has shown little interest in making concessions to the United States, the new tariffs may be a crude attempt to gain some clout to force Canada to the table.
Tariffs clashing with the USMCA could easily lead to a deeper trade dispute between the countries, even as Trump weighs the possibility of a resumption of hostilities with the European Union.
Administration officials are drawing up a list of Spanish goods that the United States could embargo in retaliation for Spain’s refusal to spend 5 percent of its GDP on defense as Trump insists. The Spanish government also prevented the United States from using military bases in Spain to launch attacks on Iran.
At the NATO summit earlier this month, Trump said he had not spoken to Spain. “Spain is a wasted cause,” he said. “We no longer want to do any business with Spain.”
He also instructed U.S. Treasury Secretary Scott Bessent to cut off trade with Spain.
“Take action immediately. Don’t even talk to them. They are hopeless. They are bad people,” Trump said. “They’re making a lot of money with us, and we’ll see them making a lot less.”
The two countries don’t actually trade that much with each other – the US imported about US$21 billion in Spanish goods last year and exported around US$26 billion to Spain, so it has a trade surplus with Madrid – but targeting Spain could blow up the deal the US finally signed with the EU late last month.
The EU is of the opinion that a threat to one of its 27 members is a threat to all of them; So if Trump’s threats against Spain are implemented, the broader trade deal could be in jeopardy.
The new tariffs, which may or may not withstand inevitable legal challenges from U.S. importers, are Trump’s latest attempt to rebuild the tariff wall through a patchwork of legislative titles that have never been used in the way he proposes to use.
For example, the legal authority for new Canadian tariffs is Section 338 of the Tariff Act 1938; This article deals primarily with the so-called preferential treatment of third countries relative to Canada’s treatment of the United States. It has never been used before.
It is conceivable that Article 301 tariffs, which are intended to be used in bilateral disputes rather than encompassing a global tariff regime, may be struck down by the courts. It’s also possible that Democrats will take control of Congress in the midterm elections and try to rein in Trump’s trade aggression.
But Trump’s frantic actions on trade last week show just how committed he is to his misunderstood trade mentality.
They also highlight his willful ignorance of who will ultimately pay the tariffs and the fact that, despite trade agreements and their promises that they would lead to massive investments in U.S. manufacturing and an increase in good-paying manufacturing jobs, the U.S. manufacturing sector continues to shrink along with employment and real wages.
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