CHICAGO (AP) — After trade negotiations crumbled at the eleventh hour, U.S. President Donald Trump's 50% tariffs on scores of Canadian imports kicked in over the weekend.
The new levies, which went into effect Saturday, are set to impact about 5% of Canada's annual exports to the U.S. —or $20 billion in goods ranging from hockey sticks to agricultural products. Canada's Prime Minister Mark Carney quickly promised that his government would roll out “dollar
for dollar” retaliatory measures starting Sept. 8.
No further talks between the two countries are scheduled, and additional threats have piled up in the meantime. Ontario Premier Doug Ford told The Associated Press in an exclusive interview Monday that “everything is on the table," noting his province would be ready to cut off electricity and critical minerals to the U.S. if the trade war worsens. Meanwhile, Trump took to social media to suggest that his administration could also up its tax on Canadian automobiles and other goods to 50% starting next year.
The U.S. and Canada once held one of the world's most durable trade alliances, but the latest escalation plunges the North American neighbors deeper into a rupture that has kept both sides of the border on edge throughout Trump's second term in office. Steeper tariffs raise costs for businesses — and almost always trickle down to households in the form of higher prices.
Here's what we know.
Again, the 50% tariffs from the U.S. are set to affect $20 billion of Canadian goods.
Canada sends the vast majority of its goods exports to the U.S. (72% last year), and Trump administration says the new taxes will be levied on products ranging from hockey sticks to wine and cement. The list is long. According to documents published by the White House, other goods subject to the tax include honey, seeds and agricultural products — as well as select makeup, perfumes, clothing, jewelry, furniture, cameras, fabric and more.
The 50% levy also applies to some products that were previously protected under the US-Mexico-Canada Agreement, a trade pact from Trump's first term. That marks a shift from past levies — and further underlines questions around the future of the USMCA overall.
To impose these 50% tariffs, Trump reached back to a long-dormant Great Depression-era law: Section 338 of the Tariff Act of 1930.
When the U.S. and world economies were in collapse nearly a century ago, Congress passed the 1930 law as part of broader “Smoot-Hawley” legislation (named after its congressional sponsors). The act raised tariffs more generally across the board, and became notorious among economists for limiting world commerce and making the Great Depression worse. But Section 338 — which authorizes the president to slap import taxes of up to 50% on imports from countries that have discriminated against U.S. businesses — has never been used specifically to raise tariffs until now.
No investigation is required to justify the levies. Nor is there any limit on how long they can stay in place. Since there's no precedent, however, the latest tariffs may also see more legal challenges.
When announcing his planned tariffs last month, Trump claimed that Canada was unfairly discriminating against U.S. exports of automobiles, alcohol and dairy products. The president expressed anger over Canada's retaliation against his own tariffs last year — noting Canadian imports of American alcohol and cars started to fall in spring 2025.
On Saturday, Canada's Carney quickly promised to match the new levies “dollar for dollar” — later announcing that those countermeasures would begin Sept. 8. He noted Canada's tariff increases would target U.S. steel, dairy, appliances, agricultural equipment, pulp and paper and electronics.
The prime minister is expected to provide more details this week. In the meantime, provincial leaders like Ontario Premier Doug Ford have reiterated Canadians' willingness to endure economic pain rather than give in to U.S. pressure.
“He underestimates Canada. We’re all in,” Ford told the AP on Monday. Beyond potentially cutting off electricity and critical minerals from Ontario, he also called for Canada to consider using oil and potash as leverage.
Meanwhile, Trump made new threats on social media. In a Monday post, he threatened to increase tariffs on Canadian cars, trucks, automotive parts and steel to 50% starting Jan. 1, 2027. Like other countries, Canada currently faces a 25% tariff on autos. A 50% sectoral tariff on most steel imports is already in effect.
“WE DON’T NEED CANADA, THEY NEED US!” Trump added in the post.
Tariffs are taxes paid by importers, or businesses that buy goods from abroad. That typically trickles down to consumers through higher prices — and, as seen over the last year, can also create uncertainty for workers across affected sectors.
“Nearly all industries and professions are likely to see downstream effects from this spiraling trade dispute,” Augustine Lo, of law firm Dorsey & Whitney, who advises clients on international trade, said Saturday.
The 50% tariffs come on top of previously-imposed levies, including a 10% rate Trump slapped on Canada just last month ostensibly for failing to do enough to prevent imports produced by forced labor and separate sectoral levies impacting trading partners globally.
The growing trade sanctions on Canada underscore Trump’s willingness to risk breaking established alliances. And Canada’s reluctance to accept a deal may reflect recent experience.
Trump has repeatedly targeted Canada, even after instances where it made concessions following his demands. Some tolls on the newly opened Gordie Howe Bridge will be shared for 15 years, despite the fact that Canadians paid for the span linking Detroit and Windsor. Canada also withdrew a digital services tax last year. All the while, Trump has threatened more tariffs over everything from a TV ad criticizing his trade policies (later pulled by Ontario's government ) to wildfires that blackened skies across North America.
Steeper tariffs have already contributed to higher inflation — but appeared to level off some in recent months, per researchers at the Federal Reserve Bank of St. Louis, notably after the Supreme Court in February struck down some of Trump's most sweeping levies.
Still, today's escalation with Canada marks the latest instance of Trump turning to other laws to impose tariffs. And more recently, Washington’s war with Iran has driven prices even higher. With the cost of living at the center of many voters' minds in a midterm election year, political ramifications could mount for the Republican president in the coming months.
_____
AP Writers Rob Gillies in Toronto and Paul Wiseman in Washington contributed.
