U.S. President Donald Trump's administration has imposed new 50 percent tariffs on nearly $20 billion worth of Canadian imports, based on a legal provision that has not been used since its passage nearly a century ago, while Canada has vowed to continue negotiating with Washington, with Canadian officials threatening to respond if the measures go into effect.
The White House said the tariffs were in response to what it called unfair discrimination by Canada against cars, alcoholic beverages and U.S. dairy products.
A senior administration official said at a news briefing that Canada was among the few countries, along with China, to respond to previous tariffs, stressing that it should be held accountable for those steps.
Based on a 1930 law
President Trump has signed three presidential declarations to release tariffs under Section 338 of the Trade Act of 1930, which gives the president the power to impose punitive tariffs of up to 50 percent on countries he deems discriminate against U.S. exports, official sources said.
This is the first known use of this substance since it came into force about 96 years ago, which gave the decision a remarkable legal and historical dimension.
White House reports indicated that the tariffs will go into effect after 30 days to provide space for negotiated solutions, noting that the list of exemptions from the duties is limited to energy products, potash, fish, and vital metals, while the tariffs include goods that were previously protected under the United States-Mexico-Canada (USMCA) agreement that has not been renewed.
The administration justified the move by what it called Canada's "discriminatory treatment" of U.S. cars, alcoholic beverages and dairy products, as well as its retaliatory actions in response to the tariffs previously imposed by Washington.
Canada's imports of U.S. cars fell 22 percent over the past year, while its imports of U.S. alcoholic beverages fell 81 percent, the administration said.
Canadian positions and threats of response
Canadian Prime Minister Mark Carney confirmed that his government has submitted comprehensive proposals to settle trade disputes with the United States, arguing that the U.S. tariffs violate the U.S.-Mexico-Canada Trade Agreement (USMCA).
"This trade dispute has raised the cost of living for families, particularly in the United States," Carney said in a statement, adding that Canada is "ready to engage in intensive negotiations to address outstanding issues in the best interests of the citizens of both countries."
He stressed that his country still believes in the "benefits of free and fair trade," noting that Canada has concluded more than two dozen new economic and security partnerships over the past period.
Although the U.S. decision has 30 days before it goes into effect, Canadian officials have threatened countermeasures if Washington continues to carry out its threats, and Ontario Premier Doug Ford said, "If these tariffs go ahead, Canada should respond with similar fees, dollar for dollar."
Canadian Chamber of Commerce chief executive Candice Laing called the decision "regrettable" but called for the 30-day period to be used to make progress in formal negotiations.
The CEO of the U.S. Spirits Council, Chris Swanger, has also called for an agreement that reopens the Canadian market to U.S. products and spends the hospitality industry from further damage.
The Canadian Chamber of Commerce said the deadline should be used to prevent the crisis from escalating, while the U.S. Spirits Council called for a negotiated solution to avoid hurting the hospitality sector.
Economic Concerns and Political Repercussions
US media reported that the decision carries serious political and economic risks for Trump as the midterm elections approach next November, especially after the Supreme Court's decision last February to invalidate the imposition of fees through the state of emergency, as Democratic Rep. Susan Delbin said that these taxes will raise prices on American families and lead to retaliation.
In this regard, the White House noted that the differences have spread to other files, with Trump requesting that additional fees be considered for damage to Canada's forest fires, at a time when relations between Trump and Carney have been at a clear slog since the Davos meeting last January.
The decision comes at a time when U.S.-Canadian relations are witnessing escalating tensions, including trade disputes, U.S. criticism of Canada's handling of wildfires that have affected air quality in the United States, in addition to ongoing disputes over auto, dairy and alcohol trade.