The U.S. has imposed its first-ever Section 338 tariff, on imports from Canada, after weeks of negotiations failed to yield an agreement to avoid it. Both sides have pledged actions that would further escalate a burgeoning trade war.
Tariff Details
The new 50 percent tariff took effect for covered goods entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Aug. 22, with no apparent termination date.
Affected products represent about five percent of Canadian exports to the U.S. (valued at approximately $20 billion) and are set forth in the annexes of the three original proclamations (available here, here, and here). They include wine and other alcoholic beverages, cosmetics, ice skates, hockey sticks, fishing rods, cement, paper and wood items, honey, textiles and apparel, machinery, jewelry, furniture, and other items. Excluded products include energy, potash, products subject to Section 232 tariffs, articles subject to the World Trade Organization Agreement on Trade in Civil Aircraft (except drones), and certain other goods, such as fish or critical minerals.
Further Actions
U.S. and Canadian officials had reportedly been close to finalizing a deal that would have prevented the Section 338 tariff from being imposed. However, talks broke down late Aug. 21 and both sides blamed the other. U.S. Trade Representative Jamieson Greer accused Ottawa of “new demands and walkbacks of other commitments” that “upended the careful balance reached in the past days.” Canadian Prime Minister Mark Carney rejected that accusation and attributed the collapse to “last-minute changes in the U.S. proposed terms” that were “unfair, uneconomic, and called into question the reliability of any deal.”
Carney said his government plans to levy “dollar for dollar” retaliatory tariffs against imports from the U.S., with an anticipated start date of Sept. 8. Carney said affected products will include steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics and that more details will be announced soon.
President Trump reportedly responded that he will double tariffs on imports of Canadian cars, trucks, and auto parts to 50 percent beginning Jan. 1, 2027.
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