US President Donald Trump has signed orders to impose new 50-percent tariffs on many Canadian goods, claiming 'discriminatory treatment' by Ottawa against American alcohol, automobile, and dairy products. The tariffs, set to take effect in 30 days, cover various items including wine, hockey sticks, and cement. Trump utilized an untested legal provision, Section 338 of the Tariff Act of 1930, for these new duties. Notably, the tariffs will impact products covered under the US-Mexico-Canada free trade agreement (USMCA).
Canadian Prime Minister Mark Carney responded by stating that Ottawa is ready to 'intensify' talks with the United States and has proposed measures to resolve disputes and modernize the USMCA. Carney criticized the US for a series of unilateral trade actions that began with tariffs imposed in violation of the USMCA. He noted that Canada has matched these measures. The announcement has sparked concerns of further escalation among businesses.
The White House accused Canada of retaliating against Trump's duties since 2025, along with China. US Trade Representative Jamieson Greer highlighted that most Canadian provinces have halted purchases of US alcohol and provided better market access to European Union dairy products. The tariff announcement aims to 'hold Canada accountable for its retaliation and discrimination.'
Trump's move marks the first use of Section 338 to impose tariffs. Experts, including Scott Lincicome of the Cato Institute, argue that the law may have been superseded by other authorities and is subject to litigation risk. Ryan Majerus, a former US trade official, suggested that the tariffs could be an attempt to gain leverage in ongoing USMCA negotiations. Chris Swonger of the Distilled Spirits Council expressed concern over potential further retaliation and its impact on US hospitality businesses.
The imposition of these tariffs could significantly strain US-Canada trade relations, especially as Trump has recently threatened Canada with increased tariffs over wildfire smoke affecting the US. The move also introduces substantial uncertainty for businesses reliant on cross-border trade. For Bangladesh, which has growing trade ties with both the US and Canada, the escalating tensions could have indirect economic implications, particularly in sectors like textiles and agriculture where both countries are significant players.
