U.S. President Donald Trump signed orders on Monday (July 21, 2026) to impose new 50% tariffs on many Canadian goods, claiming “discriminatory treatment” by Ottawa against American alcohol, automobile and dairy products.
The tariffs take effect in 30 days and cover various items including wine, hockey sticks and cement, said the White House.
Mr. Trump, who saw many of his tariffs struck down by the Supreme Court this year, tapped an untested legal provision for the new duties — Section 338 of the Tariff Act of 1930.
The latest duties will not apply to energy, potash and goods already impacted by sector-specific tariffs.
Crucially, however, they will hit products covered under the U.S.-Mexico-Canada free trade agreement (USMCA).
Canadian Prime Minister Mark Carney said in response that Ottawa stands ready to “intensify” talks with the United States, and has made proposals to resolve disputes and modernize the USMCA.
“This is the latest in a series of unilateral U.S. trade actions that began with the U.S. imposing a series of tariffs in direct violation of the Canada-United States-Mexico Agreement,” he added.
“Canada, as is its right, has merely matched those measures,” Mr. Carney said.
The announcement also sparked concerns of escalation among some businesses.
While Mr. Trump has slapped duties on U.S. trading partners since returning to the presidency last year, the orders often exempted goods entering his country under the USMCA.
His latest actions could further strain ties with the second-largest U.S. trade partner, coming just days after he threatened Canada with increased tariffs over wildfire smoke that descended into the United States.
The White House, in announcing the new tariffs, said Canada was one of two countries — along with China — to retaliate against Mr. Trump’s sweeping duties since 2025.
It also took aim at the fact that most Canadian provinces have halted purchases of US alcohol over Mr. Trump’s tariffs and repeated calls for annexation of Canada as America’s “51st state.”
“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,” charged U.S. Trade Representative Jamieson Greer.
The tariff announcement aims to “hold Canada accountable for its retaliation and discrimination,” he added.
Seeking leverage
Mr. Trump’s move marks the first time that Section 338 has been used to impose tariffs, Scott Lincicome of the libertarian Cato Institute told AFP.
Many experts believe the law has been superseded by other authorities, he said, arguing that Mr. Trump has “demonstrated a willingness to use and abuse any statute on the books.”
Ryan Majerus, a former U.S. trade official, told AFP the law is “subject to a lot of litigation risk” and has never been tested.
“This is clearly designed to get some leverage over Canada,” added Mr. Majerus, now a partner at King & Spalding.
He noted that USMCA negotiations are ongoing, and that U.S. talks with Mexico have proceeded at a faster pace than those with Canada.
“This could be an effort to try to get them going,” he said, pointing to the delay in the tariffs’ implementation.
If the tariffs were to take effect as announced, however, Mr. Majerus expects that the removal of exemptions for USMCA imports would have substantial effects.
Retaliation risk
Chris Swonger, president of the Distilled Spirits Council of the United States, said the alcohol industry appreciated acknowledgement of Canada’s restrictions.
“We had hoped, however, that this issue could be resolved without further escalation,” Mr. Swonger said.
Steep tariffs could risk further retaliation “at a time when many U.S. hospitality businesses continue to face financial hardships,” he said.
Mr. Lincicome added that Washington’s discrimination claims over dairy products could be seen as “dubious” too as they relate to terms of Canada’s trade deal with the European Union.
“It’s not a guarantee that a court will strike this down and even if they do, it’ll take a little while,” he said. “In the meantime, there’s just a massive amount of uncertainty.”
Published – July 21, 2026 07:31 am IST
