Canada is preparing for a new round of 50 per cent U.S. tariffs set to take effect Wednesday, as Ottawa and Washington remain divided on several major trade issues. The duties are expected to affect nearly $20 billion worth of Canadian exports and could put additional pressure on industries already struggling with uncertainty and slower growth.
U.S. President Donald Trump invoked Section 338 of the Tariff Act of 1930 last month to impose the tariffs on a wide range of Canadian products, including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment. The rarely used provision allows the U.S. president to impose punitive tariffs of up to 50 per cent on trading partners deemed to discriminate against American goods.
The affected products represent about 5.2 per cent of the $383 billion in goods the United States imported from Canada in 2025. Unlike many earlier U.S. tariffs, the new duties would also apply to products that qualify for preferential treatment under the United States-Mexico-Canada Agreement, removing a protection that has shielded much of Canadian trade from tariffs.
Prime Minister Mark Carney declined Monday to provide details of what he described as intense and delicate negotiations with Washington. He said he expects to speak with Trump before the Wednesday deadline.
Canada’s minister responsible for U.S. trade relations, Dominic LeBlanc, and chief trade negotiator Janice Charette have intensified discussions with their American counterparts. However, the two countries remain far apart on a potential agreement, with tariffs on Canadian-made vehicles emerging as one of the major obstacles.
LeBlanc has met U.S. Trade Representative Jamieson Greer six times over the past four weeks, including meetings on Sunday and Monday. Washington has continued to raise concerns about Canada’s dairy system and the removal of American alcohol from stores in several provinces.
The latest tariff threat also adds uncertainty to the future of the USMCA. Trump last month declined to extend the agreement for another 16 years, leaving it subject to annual reviews. The prolonged uncertainty has raised concerns about its impact on Canadian investment, employment and business confidence.
Canadian industries with significant exposure to the U.S. market could face some of the greatest pressure. The wood-products and wine sectors are among those considered particularly vulnerable, while small and medium-sized businesses that depend heavily on tariff-free access to American customers could also face disruption.
Alain Ouzilleau, owner of Canadian custom kitchen cabinet manufacturer Cabico Ltd., warned that a 50 per cent tariff would be difficult for either manufacturers or their U.S. customers to absorb. Such a steep duty, he said, could quickly make some Canadian-made products uncompetitive in the American market.
Canadian Federation of Independent Business President Dan Kelly similarly warned that the tariffs could cause significant disruption for small businesses relying on U.S. customers, as well as American companies dependent on Canadian suppliers.
Despite the concerns, University of Toronto economics professor Joseph Steinberg said the tariffs themselves may have a relatively limited impact on Canada’s overall economy because they cover only a portion of bilateral trade. He said the larger risk is that another escalation in the trade dispute could derail negotiations over the broader North American trade relationship.
Ontario Premier Doug Ford, one of the most outspoken Canadian critics of Trump’s tariff policies, said last week that Ontario would consider returning U.S. alcohol to store shelves if Canada secures a fair trade agreement. Another escalation in tariffs, however, could make such a move less likely.
With the deadline approaching, dairy remains among the most contentious agricultural issues between the two countries. Ted McKinney, CEO of the U.S. National Association of State Departments of Agriculture, described the issue as potentially the biggest obstacle in agricultural negotiations.
The use of Section 338 has also attracted attention because of its historical significance. The provision forms part of the Tariff Act of 1930, legislation associated with sweeping U.S. tariff increases and retaliatory measures during the Great Depression. Trump’s use of the authority marks another escalation in the increasingly strained Canada-U.S. trade relationship.
