50% Canada Tariffs Hit Wednesday Without Deal
50% Canada Tariffs Hit Wednesday Without Deal
The News
Tariffs of up to 50% on about $20 billion worth of Canadian exports take effect early Wednesday unless Washington and Ottawa strike a deal first.
Canada's top trade officials spent the weekend in Washington trying to head them off. As of Monday, prospects were still uncertain: Canadian broadcaster CBC reported the two sides were at an impasse, while the Washington Post reported the two governments were "inching closer" to an accord with details still fluid and recent talks contentious. Reuters reported the negotiators' positions remain far apart.
The goods in the crosshairs are consumer staples: hockey sticks, some clothing, wines, some dairy products and building materials such as cement and plywood, according to NBC News. Energy products, potash, fish and critical minerals are excluded.
Timeline
The U.S. imposes global tariffs on imports including steel, aluminum and autos, plus IEEPA tariffs on Canada over alleged fentanyl trafficking at the northern border. Canada denies its border is a significant source of fentanyl smuggling and retaliates with tariffs of its own, NBC News reported. Canada that year was the third-largest source of U.S. imports, with more than $380 billion in goods crossing the border, per Census Bureau data.
The White House announces the new duties, saying they answer Canada's "discriminatory treatment of American products" and are "leveling the playing field for crucial American exports — cars, alcohol, and dairy." Prime Minister Mark Carney calls them "the latest in a series of unilateral U.S. trade actions" and in "direct violation" of the United States-Mexico-Canada Agreement Trump signed in his first term.
The administration rolls out a separate tranche of tariffs on 60 economies after trade investigations into forced labor issues.
Dominic LeBlanc, Carney's minister for U.S.-Canada trade relations and in Washington for nearly a week, meets for an hour with U.S. Trade Representative Jamieson Greer. CTV News reported he had arrived with no meetings on the schedule.
LeBlanc and chief negotiator Charette meet Greer again, joined by Commerce Secretary Howard Lutnick, a LeBlanc spokesman told NBC News. The same day, Statistics Canada reports Canadian inflation rose 3.0%, up 0.5 points from a month earlier.
The tariffs take effect absent a deal.
Reactions
Greer framed the duties as payback. "The policy basis for [Wednesday's] duties are related to measures that Canada took against the United States," he said last week. "I've got two countries in the world that have retaliated against the United States for trade measures: the People's Republic of China and Canada. That's not the kind of company you really want to be running in."
Canadian voters are not in a mood to fold. A poll reported by the National Post found most Canadians oppose concessions and favor counter-tariffs and continued negotiation instead.
Business is bracing. Quebec companies, and the dairy sector in particular, are on edge, CTV News reported. The Financial Times reported Canadian business is braced for the 50% rate as talks go down to the wire.
Economists expect the cost to land on shoppers. "Tariffs were once considered a one-off but they are hitting sequentially," KPMG chief economist Diane Swonk said Friday. "All of this further complicates inflation over next year... We will see more cost pressures." U.S. consumer prices are up 3.4% over the last year, according to NBC News, from 2.4% just before the Iran war, and Yale's Budget Lab estimates tariffs already cost the average American household about $1,100 a year.
What's Next
Wednesday's deadline is the hard date. If no agreement lands, importers pay the duty and can pass it to American consumers.
Then come the lawyers. The administration plans to impose the tariffs under Section 338 of the Tariff Act of 1930, a 96-year-old provision letting the president hit any country that discriminates against U.S. commerce with tariffs up to 50%. No president has ever invoked it, and NBC News reported legal challenges are all but certain.
Analysts read the move as a template. "Regardless of whether the tariffs go into effect, the President is signaling that he believes he has a new tariff authority that can be used for negotiating leverage and that he intends to use it," Evercore analysts wrote in a July note, calling it the most aggressive posture since the Supreme Court's IEEPA decision.
More
Neither government would say much Monday. Canadian officials declined to detail the state of talks to NBC News, and the U.S. Trade Representative's office did not respond to the network's requests for comment.
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