Trump imposes new 50% tariffs on Canada, but the legal basis is shaky

The Trump administration has imposed 50% tariffs on a wide range of Canadian imports, using a legal mechanism that has gone largely untested since the 1930s and giving Ottawa 30 days before the duties take effect.

According to CNBC, senior administration officials said on a call with reporters that the measures respond to alleged discrimination against US products and industries. Trump signed three separate proclamations on Monday covering motor vehicles, alcohol and dairy, sectors where the administration argues American companies have faced unfair treatment.

The tariffs rely on Section 338 of the Tariff Act of 1930, an authority so rarely used that Covington and Burling LLP attorneys John Veroneau and Catherine Gibson wrote in a 2016 paper it had "gone unused for decades," finding no public record of its application since 1949.

The move follows a US Supreme Court ruling earlier this year that struck down a separate set of global Trump tariffs issued under the International Emergency Economic Powers Act of 1977, with justices finding the president had overstepped his authority. Section 338 addresses trade discrimination specifically rather than national emergencies and remains untested in court.

An administration official told reporters the new duties "apply to all covered goods," regardless of whether those goods would otherwise be exempt under the USMCA.

On the auto sector specifically, the BBC reported Trump accuses Canada of taxing US vehicles and parts not covered under USMCA, calling the practice "unreasonable" and arguing Canada discriminates against the US by not applying similar charges to other trading partners.

The new tariffs are not said to be related to recent annoyance by the US president over wildfire smoke drifting into the US from Canada.

Retaliation threats

Prime Minister Mark Carney said in a statement on X that the move represents "the latest in a series of unilateral US trade actions that began with the US imposing a series of tariffs in direct violation of the Canada-United States-Mexico Agreement." He also cited threats to Canadian sovereignty, an apparent reference to Trump's past suggestions that Canada become the 51st US state.

Ontario Premier Doug Ford wrote on X: "If these tariffs proceed, Canada should respond tariff for tariff, dollar for dollar."

Canada retaliated against Trump's tariffs in 2025 with a 25% levy on roughly C$30 billion, or $21.7 billion, of US goods. Carney later dropped some of those measures but kept tariffs on US cars, steel and aluminum in place.

The US currently maintains active tariffs ranging from 15% to 50% on Canadian steel, aluminum and copper, a 35% tariff on Canadian softwood lumber, and a 25% tax on non-US parts in vehicles, while Canada keeps its own 25% counter-tariff on selected imports of American steel, aluminum and vehicles.

British Columbia Premier David Eby, speaking to CBC News as premiers gathered in Charlottetown, Prince Edward Island, for their annual summer meeting, argued the tariffs will mainly raise costs for Americans.

"Mostly it's going to increase costs for Americans when they can least afford it," Eby said. "At this point I just feel sorry for Americans. If you're picking fights with Canadians, you don't have a friend in the world.”