Canada Tariffs Take Effect; Ottawa Retaliates Sept. 8

What's taxed

The new U.S. levies are expected to hit about 5% of Canada's annual exports to the United States — roughly $20 billion in goods, per the AP. Canada sent 72% of its goods exports to the U.S. last year.

The product list is long. Citing documents published by the White House, the AP reported the 50% tax covers goods ranging from hockey sticks to wine and cement, plus honey, seeds and agricultural products, and select makeup, perfumes, clothing, jewelry, furniture, cameras and fabric.

The levy also applies to some products that had been protected under the U.S.-Mexico-Canada Agreement, the pact Trump signed in his first term — a shift that raises fresh questions about the deal's future. The tariffs stack on top of earlier ones, including a 10% rate Trump imposed on Canada last month over forced-labor concerns, the AP reported.

Wire reporting on the story puts total cross-border trade at about $880 billion in goods and services last year.

The legal route is a 1930 law nobody has used

To impose the tariffs, Trump reached back to Section 338 of the Tariff Act of 1930 — part of the Smoot-Hawley legislation economists blame for deepening the Great Depression, the AP reported.

Section 338 lets the president impose import taxes of up to 50% on countries that have discriminated against U.S. businesses. Per the AP, it has never before been used to actually raise tariffs. No investigation is required to justify the levies, and there is no limit on how long they can stay. Because there is no precedent, the AP noted, the tariffs may draw more legal challenges.

The bill lands on both sides

Tariffs are taxes paid by importers — businesses that buy goods from abroad — and that typically trickles down to consumers as higher prices, the AP reported.

"Nearly all industries and professions are likely to see downstream effects from this spiraling trade dispute," Augustine Lo, of the law firm Dorsey & Whitney, told the AP. A partner at the same firm, Dave Townsend, said Saturday that North America now has a "new tariff landscape," and that a big question is whether the levies prove temporary.

The effects are already showing up in business plans. CTV News reported that an Ottawa-area distillery is redirecting its expansion plans east and west after the talks collapsed and the tariffs took effect.

Steeper tariffs have already contributed to higher inflation, though the AP reported the increases appeared to level off in recent months, per researchers at the Federal Reserve Bank of St. Louis, after the Supreme Court in February struck down some of Trump's broadest levies.

Sources: Associated Press (via PBS NewsHour), CTV News, The New York Times, Japan Times.