50 Percent US Tariffs Looming, Canada Seeks Trade Deal in Washington

Illustration of the Canadian flag. The Canadian government is racing against time to find a trade deal with the US before 50 percent tariffs take effect on hundreds of product categories. Illustration photo: Pexels.

Canada is racing against time to reach a temporary trade deal with the United States before 50 percent tariffs on more than 500 categories of Canadian products take effect next week.

China Daily, quoted Friday, August 14, said the US President Donald Trump's administration is scheduled to impose additional tariffs on Wednesday. Products affected include alcoholic beverages, dairy products, honey, and sports equipment.

The new tariffs are expected to target goods worth about 20 billion dollars or about 5 percent of Canadian exports to the US. Many of these products were previously protected from tariffs under the United States-Mexico-Canada Agreement or USMCA.

Energy, potash or potassium-based fertilizer raw materials, fish, and critical minerals are excluded.

Bank of Montreal Chief Economist Douglas Porter estimates that such a tariff could stop almost all exports of affected products.

"A 50 percent tariff would likely stop almost all exports of these goods," Porter told Canadian media, as quoted by China Daily.

The Trump administration linked the tariffs to what it called discrimination against US products. Washington highlighted boycotts of US-made alcoholic beverages and Canadian restrictions on the import of dairy products.

The White House called the restrictions unreasonable, unequal, and discriminatory.

Canadian Minister for Canadian-US Trade Dominic LeBlanc and Chief Trade Negotiator Janice Charette met with US Trade Representative Jamieson Greer in Washington on Tuesday. It was their third meeting in three weeks.

"Discussions are ongoing and we continue to be at the negotiating table to firmly defend and defend Canadian interests," LeBlanc wrote on X.

Greer wants a provisional deal to be reached before negotiations on the USMCA update resume.

However, the Canadian Broadcasting Corporation or CBC, citing a number of sources, reported that the Canadian team was not satisfied with the latest US offer. Washington offered a reduction in a number of tariffs, but not as much as Ottawa wanted.

Members of Canada's cross-border trade advisory committee are also reportedly preparing to hold a meeting on Monday, coinciding with Prime Minister Mark Carney's return from Italy. Carney's office said he was still in contact with the team regarding the Canada-US negotiations.

Ontario Premier Doug Ford has called on Canada to retaliate with an equivalent move if the tariffs are actually imposed.

"If these tariffs are imposed, Canada must retaliate with tariffs, dollars for dollars," Ford wrote on social media.

The new tariffs will use Article 338 of the US Tariff Act of 1930 or the Smoot-Hawley Tariff Act. The rule gives the president the authority to take action against unilateral trade policies that are considered harmful to the US.

The article has not been used for almost a century so it is not clear how the court will assess the legality of its application.

Trump previously refused to extend the USMCA automatically for 16 years when the July 1 deadline expired. As a result, the agreement must now undergo a mandatory review every year.

He has also imposed tariffs under Article 232 of the Trade Expansion Act of 1962 on cars, steel, aluminum, and forestry products.

The new tariffs are expected to cut Canada's GDP by up to 0.5 percent. This figure is in addition to the decline of about 1.5 percentage points previously estimated by the Bank of Canada due to the tariffs already in place.

ATB Financial noted that Canadian exports to the US fell by more than 5 percent last year. On the other hand, Canadian exports to other countries grew by more than 15 percent.