New 50% US tariffs add pressure on Canada as trade tensions deepen

The latest US tariffs on certain Canadian goods are being viewed by experts as both a negotiating tactic and a shift in the Trump administration's legal strategy for pressuring Canada.

US President Donald Trump on Monday announced a new 50 percent tariff on certain Canadian goods, including wine, hockey sticks and cement.

The White House said the move was intended to address what it described as discriminatory Canadian trade policies, including restrictions on US alcohol sales, dairy supply management and automobile import quotas.

Canadian Prime Minister Mark Carney condemned the move, calling it "the latest in a series of unilateral US trade actions" that began with Washington imposing tariffs "in direct violation" of the Canada-United States-Mexico Agreement (CUSMA).

"Canada stands ready to engage intensively to address outstanding issues with the US to the mutual benefit of our citizens," Carney said in a statement.

Ontario Premier Doug Ford urged Ottawa to respond forcefully.

"I'll never stop fighting to protect Ontario. If these tariffs proceed, Canada should respond tariff for tariff, dollar for dollar," Ford wrote on social media.

Trade experts said the latest measures reflect both a shift in the legal tools employed by the Trump administration and a broader effort to increase pressure on Canada amid stalled trade negotiations.

Dave Townsend, a partner in Dorsey & Whitney's International Trade Group, said the administration's latest action differs from earlier tariff measures.

"Today, the Trump administration announced tariffs on nearly $20 billion worth of annual imports from Canada under a different legal authority, Section 338. The tariffs would take effect 30 days from now. Why now against Canada?" Townsend said.

He said the timing appears closely linked to ongoing negotiations between Washington and Ottawa.

"The new potential tariffs on goods from Canada appear to be because Canada has thus far not agreed to a framework trade agreement with the United States.

"In its statement on the new tariffs, the White House noted that only Canada and China have not reached such agreements with the United States, and instead those two countries have retaliated against the US for earlier-imposed tariffs," he said.

"Thus, the higher tariffs for goods from Canada appear to be aimed at encouraging an agreement between Canada and the United States, or in retaliation for the failure to reach such agreement, or both," Townsend added.

He said the latest measures could further strain bilateral trade relations.

"The question now is whether the two sides can reach such an agreement or whether a cycle of escalation and retaliation takes hold between the two countries," he said.

Ronald Stagg, a history professor at Toronto Metropolitan University, said the administration's latest move also marks a significant change in the legal basis for imposing tariffs.

"Having run into problems with duties imposed under 1974 and 1962 trade acts, Trump has now reached back to the 1930 act, which resulted in the deepening of the Great Depression, as other countries retaliated by raising tariffs," Stagg told China Daily.

"This act allows the president to impose duties even on goods normally exempted by the CUSMA agreement," he said.

Stagg said the announcement appeared to catch many in Canada by surprise.

"This seems to have come as a surprise to the Canadian government, and the media, which were focused on Trump's musings on the imposition of tariffs or other financial penalties on Canada for allowing smoke from wildfires to enter the United States," he said.

Only days before announcing the new tariffs, Trump threatened additional financial penalties against Canada over wildfire smoke drifting across the border, accusing Canada of failing to properly manage its forests.

Stagg said the latest actions reflect a broader pattern in Trump's approach.

"Certainly he tries to monetize any situation," he said.

He cited Trump's position on the Gordie Howe International Bridge connecting Detroit with Windsor, Ontario as an example.

"His refusal to allow the Gordie Howe Bridge to open until the United States, or possibly the owner of the competing Ambassador Bridge, a significant donor to the Republican Party, received additional compensation, is a good example," he said.

"This demand came despite Canada having paid for the construction, in cooperation with Michigan.

"The issue for Trump is, on what grounds can he demand money for the United States, or his for financial supporters, or for his family in each situation," he said.

Stagg argued that the administration has found another way to increase financial pressure on Canada.

"In the 1930 trade act he has found a way to further penalize Canada financially."

Looking ahead, Stagg said Canada's response will be critical.

"The question now is, will Canada retaliate, or will the Canadian government complain, but try not to 'poke the bear'," he said.

gaoyang@chinadailyusa.com