Trump's new 50% tariffs on Canada risk igniting a fresh trade war

President Donald Trump on Monday announced sweeping tariffs against Canada, threatening to reignite a trade battle with one of America's closest allies and top economic partners. The 50% tariffs on certain Canadian goods, including electrical equipment and machinery, are among the steepest tariffs his administration has levied against any country. The levies take effect in 30 days, covering about $20 billion of Canadian goods, the White House said. Trump cited Section 338 of the Tariff Act of 1930, a law that allows a president to set tariffs up to 50% when another country discriminates against American goods. However, the law has never been applied this way. Excluded from the latest round of tariffs are several key Canadian imports, including energy products, critical minerals, fish and other goods that are subject to industry-specific duties, such as cars and metals. However, unlike other levies Trump has enacted against Canada, there will be no carve-outs for goods covered by the trade pact known as the United-States-Mexico-Canada Agreement. According to research firm Capital Economics, only about 5% of Canadian imports would be affected by the new tariffs -- or about 0.6% of total US imports. However, the Supreme Court ruled in February that the president could not use the International Emergency Economic Powers Act, or IEEPA, to implement sweeping tariffs globally. The decision negated Trump's attempt to tax imports from every country and additional punitive tariffs on China, Canada and Mexico. Instead, Trump imposed temporary, across-the-board 10% tariffs under Section 122 of the Trade Act of 1974, which are set to expire later this week. "If these tariffs proceed, Canada should respond tariff for tariff, dollar for dollar," Ford said in a post on X.