United States President Donald Trump approved on Monday a new set of 50% tariffs on certain Canadian products, alleging “discriminatory treatment by Canada towards U.S. products” on the same day the second round of review of the trade agreement between the United States, Canada, and Mexico (USMCA) begins. Through three executive orders, the Republican leader has established new 50% import duties on motor vehicle materials, dairy products, and alcoholic beverages. “By doing so, the president offsets the burden and disadvantage that discriminatory treatment by Canada imposes on U.S. trade and creates a level playing field for crucial U.S. exports: automobiles, alcohol, and dairy products,” the White House states.
The Trump Administration indicated that the tariffs will take effect in 30 days and will cover “products ranging from wine to hockey sticks and cement.” In a statement, it specified that other products such as fish or critical minerals would be excluded.
The United States has already imposed 25% tariffs on Canadian steel and aluminum. Trump’s new executive order does not affect them but is explicit regarding the new motor vehicle materials, dairy products, and alcoholic beverages: “These tariffs apply to all covered products, regardless of whether a product originates under the United States-Mexico-Canada Agreement (USMCA).” The executive order also includes an ad valorem tax of up to 50% for a wide category of products such as essential oils, honey, flowers, seeds, chemicals, textiles, wood, paper, metals, machinery, and luxury items. This effectively blocks Canadian trade in the U.S. market for a wide variety of products.
It was expected. The U.S. president had already warned three days before the World Cup final, held last Sunday, in which Spain was crowned champion after defeating Argentina. At that time, the sky over New York dawned covered in smoke due to the dozens of fires ravaging the Ontario region. “We hold Canada responsible for not properly maintaining its forests and the underbrush they contain, which causes the United States to suffer an unnecessary invasion of dirty, polluted, and harmful air, whose quality is dangerous and totally unacceptable,” he warned via his social network, Truth.
Threat to regional trade
During the last match of the football championship held at MetLife in New Jersey, Trump struck again. While both leaders enjoyed the game in the box, the Republican leader warned his neighbor that he had to put an end to the fires. “I told him: ‘You have to stop these fires from coming and, you know, poisoning our air. Our air is poisoned,’” the president confessed after the game. “If we can help them, we will help them. But maybe they should pay compensation or something like that, or we should impose tariffs. Because it was terrible,” Trump insisted. “I mean, there were businesses that closed, particularly in Michigan.”
Although the occupant of the Oval Office claimed to have a “good relationship” with Carney, he did not hesitate to approve new tariffs of up to 50% on several Canadian products.
The new wave of tariffs threatens to destabilize trade in the region at a time when the United States, Canada, and Mexico are negotiating the update of the Trade Agreement among the three countries (USMCA), the largest trade agreement in Latin America, signed in 2020 during Trump’s first term. At that time, the real estate magnate turned politician said it was the best trade deal in history. But six years later, he is reluctant to renew it and puts obstacles in the way of his closest trading partners.
Washington is playing to divide its neighbors. While maintaining fluid talks with Mexico on trade issues, it has raised tensions with Canada. In this strategy, Trump decided not to renew the USMCA in its current form “because the agreement is not good enough for the United States,” according to the presidential order.
Experts fear the measure could trigger a new wave of inflation and an escalation of diplomatic tensions between the two neighbors, whose relationship is not at its best. A few months ago, when Carney visited the White House for the first time under Trump, he left with a bad taste after hearing the Republican president say that Canada should become the 51st state of the United States. “There are places that simply are not for sale… [Canada] is not for sale, and it never will be,” the Canadian replied with a somber face. But the Republican, who enjoyed provoking his guest, responded: “Never say never.”
Although Trump admires Carney, praises his insight and intelligence, he does not forgive him that Canada has been one of the few countries to stand up to his trade offensive. “He is a good man, but he can be very unpleasant,” Trump said of his neighbor referring to his determination to counter U.S. tariffs. “He is a world-class leader. He is a good man, does a great job, and is a tough negotiator,” he emphasized. Canada is, along with China, one of the few countries that responded against U.S. tariffs. Ottawa is, in fact, the only G-20 member that has not yet reached a trade agreement with Washington.
A senior White House official specified that the president signed three executive orders to impose the tariffs under Section 338 of the Trade Act of 1930. Several Democratic lawmakers proposed last year to repeal that section, arguing that Trump could use it to destabilize the economy.
An official said Trump had asked his advisers to study the possibility of imposing additional tariffs on Canada because its forest fires harm air quality in the United States, according to AP.
