Tariff Talk

The suspension of new tariffs on Canadian goods has, well, been suspended, with the tariffs taking effect on Saturday. The 50% tariff applies to dairy, alcohol, sporting goods, wood and paper products, and cement. Canada is preparing retaliatory tariffs for September 8 that will target dairy, pulp and paper, steel, agricultural equipment, appliances, and electronics.

This tariff also signals a halt in discussions surrounding the renewal of the USMCA, as it does not provide exclusions for goods that qualify under the trade agreement. The White House Fact Sheet states that the use of Section 338 tariffs is “in response to Canada’s discriminatory treatment of American products. By doing so, President Trump is offsetting the burden and disadvantage on U.S. commerce from Canada’s discriminatory treatment of U.S. commerce and is leveling the playing field for crucial American exports—cars, alcohol, and dairy.” Products subject to Section 232 tariffs are excluded from the new tariff.

This marks the first use of Section 338 of the Tariff Act, which was enacted in 1930 and previously used as a negotiation tactic with France and Spain, and later with Germany and Japan.