Trump hits Canada with 50% Tariffs Citing Disputes Over Autos, Alcohol and Cheese

The move could unleash a new wave of economic chaos, with the risk of higher inflation and further fraying of relations between the two countries, which were closely knit before Trump’s return to the White House. The administration official previewing the action said Canada was one of the only countries other than China to retaliate against Trump’s previous tariffs and should be held accountable.

The official insisted on anonymity in a call with reporters to preview the president’s actions and said Trump signed three proclamations to initiate tariffs under Section 338 of the 1930 Trade Act. Last year, several Democratic lawmakers proposed removing the section, saying Trump could use it to destabilize the economy.

The new 50% tariffs will exclude energy products, potash, fish and critical minerals, but will include goods previously protected from import duties by the United States-Mexico-Canada Agreement, or USMCA. The failure to renew the 2020 trade agreement by the United States triggered a new set of negotiations that could continue until 2036.

The White House said in a memo that the tariffs would go into effect within 30 days; This means there is time for negotiations, as Trump has not always followed through on his announced tariff increases on imports.

Canadian Prime Minister Mark Carney said in a statement that his government believes in “the benefits of free and fair trade” by signing “more than 20 new economic and security partnerships.” He said Canada is ready to negotiate with the Trump administration.

“This trade conflict has increased costs, especially for families in the United States,” Carney said. “Canada stands ready to work intensively to address unresolved issues with the United States for the mutual benefit of our citizens.”

Canada faces risk of broader trade war Yet tariffs could escalate into a broader trade war as Canada tries to defend its economy. Ontario Premier Doug Ford saw a potential showdown ahead.

“If these tariffs continue, Canada must respond tariff for tariff, dollar for dollar,” Ford said on social media.

Candace Laing, CEO of the Canadian Chamber of Commerce, said the Trump administration’s moves were “regrettable” but that the two countries should use the 30-day window before tariffs kick in “to make meaningful progress in advancing formal talks.”

Chris Swonger, CEO of the Distilled Spirits Council of the United States, also called for an agreement: “We encourage policymakers on both sides of the border to seek a negotiated solution that would restore market access for U.S. spirits and prevent further harm to the U.S. hospitality industry.”

But Scott Lincicome, vice president for general economics at the Cato Institute, a libertarian think tank, said using a Depression-era law to impose tariffs raises some risks because those tariffs could be applied not just to Canada but also to other U.S. trading partners, injecting “huge uncertainty” into the global economy.

“We crossed the Rubicon,” Lincicome said. “Invoking 338 is the nuclear option for Trump tariffs.”

Tariffs also a political challenge for Trump The new tariffs pose serious political and economic risks for Trump ahead of midterm elections for control of Congress in November. The “Liberation Day” tariffs in April last year caused a meltdown in the financial market due to concerns about inflation and recession, prompting it to pull back rates for a period of negotiations.

The Supreme Court ruled this February that Trump lacked the legal authority to impose tariffs by declaring an economic emergency, prompting the administration to find alternative ways to raise import duties by relying on a range of legal authority.

Tariffs are import taxes that companies can then pass on to consumers in the form of higher prices. The president argues that the costs created by tariffs will cause production to move to the United States, but there is little evidence of this in economic data.

“These new taxes will raise prices for American families and likely lead to retaliation against the very industries that Trump wants to protect,” said Rep. Suzan DelBene, D-Wash., chair of the Democratic Congressional Campaign Committee.

The latest import tariffs could worsen Trump’s poor ratings on the economy. While running for president, he promised voters he would lower prices, but the annual inflation rate has increased since he became president as the war in Iran and tariffs pushed up oil prices.

Trump has repeatedly targeted Canada on trade issues The president has also asked aides to review additional tariffs on Canada because wildfires are harming air quality in the United States, a Trump administration official said. He had threatened to do this publicly in social media posts.

At Sunday’s World Cup final, Trump watched the game with Carney. The Trump administration official said their time together at the game was not a working visit to discuss trade and tariffs.

In his statements, Trump claims that Canada discriminates against American cars, alcohol, and cheese compared to other nations; but his claim is based largely on retaliatory actions taken by Canada after the US president imposed tariffs on Canada under the pretext that he needed to do more to stop fentanyl smuggling.

In his auto statement, Trump noted that Canada is maintaining a 25% tariff on imports of U.S. motor vehicles that do not qualify for preferential treatment under the USMCA starting in April 2025.

Regarding alcohol, the White House said all but two Canadian provinces and territories halted the purchase and retail sale of American alcoholic beverages starting last year; this was also a response to Trump’s tariffs and taunts about making Canada the 51st state.

But Trump has long opposed Canada’s treatment of U.S. cheese, saying in his statement that Canada discriminates against the U.S. compared to Europe when it comes to dairy products.

Trump and Carney have had a frosty relationship, with Carney, the former central banker who vowed to “elevate” for Canada during last year’s election campaign.

At the World Economic Forum in Davos, Switzerland, in January, Carney called out Trump — without naming him — saying the “most powerful” countries were using the economy to coerce less powerful nations.

Trump responded at the time: “Canada lives because of the United States.”