Trump's 50 Percent Tariffs on $20 Billion of Canadian Goods Take Effect in First Use of Section 338

President Donald Trump's 50 percent tariffs on a wide range of Canadian exports took effect at 12:01 a.m. eastern time on Wednesday, after a phone call between Trump and Prime Minister Mark Carney earlier in the week failed to produce an agreement. The duties rest on Section 338 of the Tariff Act of 1930, a provision no president had ever used before Trump signed three proclamations on July 20.

The measures cover motor vehicles, dairy and alcoholic beverages, the three sectors in which the administration found that Canada discriminates against American exporters. The annexes reach much further, into wine, furniture, plywood, paper, cement and hockey sticks. Al Jazeera, citing the Center for Strategic and International Studies, put the exposed trade at $20.2 billion a year, roughly 5 percent of American goods imports from Canada. CBC News has reported a larger figure of about $30 billion in goods at risk across the negotiation, and the two numbers reflect different definitions of what the talks covered rather than a dispute over the tariff lines themselves. Global Trade Alert calculates that Canada's average tariff rate into the United States rises 1.89 percentage points overnight, to 6.27 percent.

What sets Section 338 apart is procedural. The statute lets the president act by proclamation alone, without an investigation by the International Trade Commission and without a vote in Congress, once he finds that another country discriminates against American commerce. The administration turned to it after the Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in February, ruling that the law did not authorize broad import duties. A valid certificate of origin under the United States-Mexico-Canada Agreement (USMCA) does not exempt a covered product, which Carney has called a violation of the agreement.

Carney has said that "everything's on the table" if no deal emerges, but that Ottawa will not retaliate before the tariffs land, on the grounds that acting first would damage the negotiations. Canada's leverage is partly outside federal control. Eight of ten provinces removed American beer, wine and spirits from government-run stores during the earlier phase of the dispute, and Ontario Premier Doug Ford and British Columbia Premier David Eby have both refused to lift those bans unless Washington also removes the separate Section 232 duties on autos, steel and aluminum. Trade Minister Dominic LeBlanc has pressed for exactly that broader package.

Currency markets moved modestly ahead of the deadline. The Canadian dollar traded about 0.2 percent weaker at roughly 1.39 per United States dollar, according to Reuters market coverage, after touching its strongest level in more than two months on Monday. Both governments say talks continue, and Trump has indicated he remains open to an agreement that would unwind the duties.