Trump Invokes Untested Tariff Law to Impose 50% Duties on Canadian Goods
U.S. President Donald Trump signed orders on Monday to impose new 50% tariffs on many Canadian goods, claiming “discriminatory treatment” by Ottawa against American alcohol, automobile and dairy products. The tariffs, which take effect in 30 days, cover items including wine, hockey sticks and cement, according to the White House.
The move marks the first time that Section 338 of the Tariff Act of 1930 has been used to impose tariffs. Many legal experts believe the provision has been superseded by other authorities, raising questions about its viability. “This is clearly designed to get some leverage over Canada,” said Ryan Majerus, a former U.S. trade official, noting that USMCA negotiations are ongoing.
The new duties will not apply to energy, potash or goods already impacted by sector-specific tariffs. However, they will hit products covered under the U.S.-Mexico-Canada free trade agreement (USMCA), a significant escalation from previous measures that often exempted USMCA goods.
Canadian Prime Minister Mark Carney responded by saying Ottawa is 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 said, adding that “Canada, as is its right, has merely matched those measures.”
The announcement has sparked concerns among businesses about further escalation. Chris Swonger, president of the Distilled Spirits Council of the United States, said the alcohol industry appreciated acknowledgment of Canada’s restrictions but had hoped the issue could be resolved without further tariffs, which could risk retaliation “at a time when many U.S. hospitality businesses continue to face financial hardships.”
The White House said Canada was one of two countries—along with China—to retaliate against Trump’s sweeping duties since 2025. It also criticised Canadian provinces for halting purchases of U.S. alcohol in response to Trump’s tariffs and remarks about making Canada the “51st state.” U.S. Trade Representative Jamieson Greer charged that “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.”
Many experts believe the use of Section 338 is legally risky. Scott Lincicome of the Cato Institute said Trump has “demonstrated a willingness to use and abuse any statute on the books.” Ryan Majerus noted the law is “subject to a lot of litigation risk” and has never been tested. If the tariffs take effect, the removal of exemptions for USMCA imports is expected to have substantial economic effects.
The latest action could further strain ties with Canada, the second-largest U.S. trade partner, coming just days after Trump threatened increased tariffs over wildfire smoke that drifted into the United States.
