Canada Faces 50% U.S. Tariffs on Aug. 19

Canada has six days to cut a deal before 50% U.S. tariffs hit a wide range of its exports on Aug. 19 — and separately, Washington's proposals for rewriting the North American trade pact are alarming Detroit's automakers, who say the changes could add billions a year to their costs.

The 50% tariffs would be imposed under Section 338 of the Tariff Act of 1930, a provision never previously used. Quebec Premier Christine Fréchette met economic stakeholders in Montreal on Thursday to prepare for them, CTV News reported.

What Applies Now

U.S. car companies are still absorbing the tariffs the administration imposed last year — levies on steel and aluminum, on car parts, and on vehicles shipped in from Mexico and Canada, Reuters reported. Executives say rivals from Japan, South Korea and Europe face lower tariff burdens.

Canada's aluminum, steel and lumber industries already face separate tariffs imposed under Section 232.

Under the current North American agreement, vehicles must contain 75% North American content to qualify for lower tariffs.

The Dates

Aug. 19 — The 50% tariffs on a wide range of Canadian products are scheduled to take effect.

Early next week — Trade Minister Dominic LeBlanc and Chief Negotiator Janice Charette are working toward a deal to present to President Donald Trump, before the deadline.

September — Talks with Mexican trade officials are scheduled on revising the North American trade deal, Reuters reported. U.S. proposals floated ahead of those talks are what has Detroit worried.

The Numbers

Washington is demanding that vehicles contain at least 50% U.S.-made content to qualify for lower tariffs, and has proposed raising overall North American vehicle content above the current 75% level. Those two changes alone would add at least $2 billion in annual costs for each Detroit automaker, according to estimates at two automakers cited by Reuters.

On the Canadian side, Quebec estimates as much as $7 billion in potential impact to its exports, covering about 9% of what the province ships out, Fréchette said.