Key facts
- President Donald Trump invoked Section 338 of the Tariff Act of 1930 to impose new tariffs on Canadian goods.
- The tariffs amount to 50% on approximately $20 billion of Canadian imports.
- The law allows tariffs when a country imposes "unreasonable charge, exaction, regulation, or limitation" on U.S. goods or discriminates against U.S. commerce.
- Covered goods cannot claim preferential treatment under the USMCA.
- Canada has a 30-day negotiation period before the tariffs take effect on August 19.
- Legal experts believe the tariffs are likely to face and potentially fail in court challenges.
President Donald Trump has invoked Section 338 of the Tariff Act of 1930, a little-known and rarely used law, to impose new tariffs on approximately $20 billion of Canadian imports. The tariffs, set at 50%, target goods ranging from hockey sticks to cement, representing about 5% of total U.S. imports from Canada. These goods will not be eligible for preferential treatment under the United States-Mexico-Canada Agreement (USMCA).
The administration justified the tariffs by citing findings that Canada has imposed "unreasonable charge, exaction, regulation, or limitation" on U.S. goods or discriminated against U.S. commerce. The law allows the president to levy duties "whenever he shall find as a fact" that such discriminatory behavior is occurring, with the International Trade Commission (ITC) tasked to bring such instances to the president's attention.
Canada has until August 19 to negotiate alternative trade resolutions before the tariffs officially go into effect. Despite the potential flexibility of Section 338 as a trade weapon, legal experts express significant doubts about the tariffs' ability to withstand court challenges, suggesting they may be struck down. The move has also raised concerns about U.S.-Canada supply chains and could create new leverage in ongoing USMCA discussions.