Trump Imposes 50% Tariffs on Canada    07/21 06:29

   President Donald Trump on Monday imposed 50% tariffs on most Canadian goods, 
declaring that Canada has unfairly discriminated against American autos, 
alcohol and dairy products.

   WASHINGTON (AP) -- President Donald Trump on Monday imposed 50% tariffs on 
most Canadian goods, declaring that Canada has unfairly discriminated against 
American autos, alcohol and dairy products.

   The move could unleash a new wave of economic chaos, with risks of higher 
inflation and further fraying of relations between two nations that had been 
closely woven together before Trump's return to the White House. The 
administration official previewing the action said that Canada was one of the 
only nations other than China that retaliated against Trump's previous tariffs 
and must be held accountable.

   The official insisted on anonymity on a call with reporters to preview the 
president's actions and said that Trump signed three proclamations to launch 
the tariffs under Section 338 of the 1930 Trade Act. Several Democratic 
lawmakers last year proposed repealing the section because they said Trump 
could use it to destabilize the economy.

   The new 50% tariffs would exclude energy products, potash, fish and critical 
minerals, but they would include goods that had previously been protected from 
import taxes by the United States-Mexico-Canada Agreement, or USMCA. That 2020 
trade pact was not renewed by the U.S., triggering a new set of negotiations 
that could run until 2036.

   The White House said in a fact sheet that the tariffs would go into effect 
in 30 days, meaning there is time for negotiations as Trump has not always 
followed through on his announced tax hikes on imports.

   Canadian Prime Minister Mark Carney said in a statement that his government 
believes in the "benefits of free and fair trade," having signed "more than 20 
new economic and security partnerships." He said Canada is prepared to 
negotiate with the Trump administration.

   "This trade dispute has raised costs for families, particularly in the 
U.S.," Carney said. "Canada stands ready to engage intensively to address 
outstanding issues with the U.S. to the mutual benefit of our citizens."

   Canada faces the risk of a broader trade war

   Still, the tariffs could escalate into a wider trade war as Canada seeks to 
defend its economy. Ontario Premier Doug Ford saw a possible showdown ahead.

   "If these tariffs proceed, Canada should respond tariff for tariff, dollar 
for dollar," Ford posted on social media.

   Candace Laing, CEO of the Canadian Chamber of Commerce, said the Trump 
administration's moves were "regrettable" but the two countries need to use the 
30-day window before the tariffs start "to make meaningful progress in 
advancing formal talks."

   Chris Swonger, CEO of the Distilled Spirits Council of the United States, 
also called for a deal: "We encourage policymakers on both sides of the border 
to pursue a negotiated solution that restores market access for U.S. spirits 
and avoids further harm to the U.S. hospitality sector."

   But the use of a Great Depression-era law to impose the tariffs broadens 
some of the risks, as those tariffs could be applied to other U.S. trading 
partners, not just Canada, and inject "massive uncertainty" into the global 
economy, said Scott Lincicome, vice president of general economics at the Cato 
Institute, a libertarian think tank.

   "We crossed the Rubicon," Lincicome said. "The invocation of 338 is the 
nuclear option for Trump tariffs."

   Tariffs are also a political challenge for Trump

   The new tariffs carry serious political and economic risks for Trump ahead 
of the November midterm elections for control of Congress. His "Liberation Day" 
tariffs last year in April provoked a financial market meltdown over concerns 
about inflation and a recession, prompting him to walk back the rates for a 
period of negotiation.

   The Supreme Court ruled this February that Trump had lacked the legal 
authority to impose the tariffs by declaring an economic emergency, causing the 
administration to find alternative ways to raise import taxes based on a series 
of legal authorities.

   Tariffs are taxes on imports, which companies can then pass along to 
consumers in the form of higher prices. The president maintains that the costs 
created by tariffs will cause manufacturing to relocate to the U.S., though 
there is little evidence of that in the economic data.

   "These new taxes will raise prices on American families and likely lead to 
retaliation against the very industries Trump purportedly wants to protect," 
said Rep. Suzan DelBene, D-Wash., who is chair of the Democratic Congressional 
Campaign Committee.

   The latest import taxes could worsen Trump's weak ratings on the economy. He 
promised voters when running for the presidency that he would bring prices 
down, but the annual inflation rate has risen since he became president because 
the tariffs and the war in Iran are pushing up oil prices.

   Trump has repeatedly targeted Canada on trade issues

   The Trump administration official said the president had also requested that 
his aides look into additional tariffs on Canada because its wildfires hurt air 
quality in the U.S. He had publicly threatened to do so in social media posts.

   At the World Cup final on Sunday, 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.

   Trump claims in the proclamations that Canada discriminates against American 
autos, alcohol and cheese relative to other nations, but his argument rests in 
large part on retaliatory actions taken by Canada after the U.S. president 
imposed tariffs on Canada under the pretext that it should do more to stop 
fentanyl smuggling.

   Trump noted in his autos proclamation that Canada maintained, starting in 
April 2025, a 25% tariff on the imports of U.S. motor vehicles that did not 
qualify for preferential treatment under the USMCA.

   The White House said that, regarding alcohol, all but two Canadian provinces 
and territories halted the purchase and retailing of American alcoholic 
beverages beginning last year, which was also a response to Trump's tariffs and 
taunts of making Canada the 51st state.

   But Trump has long objected to Canada's treatment of U.S. cheese, saying in 
his proclamation that Canada discriminates against the U.S. compared to Europe 
on dairy products.

   Trump and Carney have had a frosty relationship, with Carney, a former 
central banker, who pledged to go "elbows up" for Canada during his election 
campaign last year.

   At the World Economic Forum in Davos, Switzerland, in January, Carney called 
out Trump -- without naming him -- by saying that the "most powerful" countries 
are using the economy to coerce less powerful nations.

   Trump responded at the time by saying: "Canada lives because of the United 
States."