The news: U.S. President Donald Trump has imposed a 50% tariff on a range of Canadian goods. The key change for importers is that it applies to goods that qualify under USMCA. Those good had been exempt from his earlier tariffs.
The law: The tariff uses Section 338 of the Tariff Act of 1930, which lets a president raise duties up to 50% on a country found to discriminate against U.S. commerce. It has gone almost unused for 90 years.
Why now: Trump has now tried three legal routes to tariff Canada. The Supreme Court struck down his emergency powers in a 6-3 ruling in February. He then replaced them with a 15% tariff on most countries, but it exempted USMCA goods. Section 338 reaches them.
What's hit: The complaint is narrow, but the tariff is broad. The White House points to cars, alcohol and dairy, but the 50% duty covers a much wider list:
Chemicals
Textiles
Consumer goods
Wood products and paper
Machinery and tools
Raw agricultural and natural materials
The case: The White House cited several examples. Canada keeps a 25% tariff on U.S. cars that do not qualify under USMCA. Some provinces halted U.S. alcohol purchases while still allowing other countries’ products. It also said Canada’s cheese quotas are stricter for U.S. dairy than on European imports. It called the system “discriminatory, unequal, and unreasonable.”
Does it stack: Mostly no. Steel, aluminum, autos and lumber already carry separate national security tariffs and are exempt, so they will not be taxed twice. On everything else covered, the 50% is the main duty.
What's exempt: Energy, potash, fish and critical minerals are left out.
Canada’s response: Prime Minister Mark Carney is reportedly trying to ease tensions by removing some of Canada's retaliatory tariffs on U.S. goods.
What's next: The tariff takes effect August 19. Because Section 338 has been dormant for so long, trade lawyers expect a quick court challenge.
