OTTAWA: Canada faces a new round of 50% US tariffs this week that businesses say could cause job losses in some already struggling industries, while complicating broader negotiations over the future of North America’s free trade agreement.
US President Donald Trump last month invoked Section 338 of a Depression-era US law called the Tariff Act of 1930 to impose duties starting today on a range of Canadian imports including wine, furniture, dairy products, cement, clothing, fishing rods, hockey equipment and some other goods.
That provision permits Trump to impose punitive tariffs of up to 50% against trading partners deemed to have discriminated against US goods.
Trump’s unprecedented use of this power is part of his hardline approach toward trade with Canada since he returned to the presidency last year. Canada is the No 2 trading partner of the United States, behind only Mexico.
The tariffs would cover nearly US$20bil of Canadian goods, amounting to about 5.2% of the US$383bil worth of goods the United States imported from Canada in 2025, according to US Census Bureau data.
Asked about the looming tariffs and prospects for a deal, Prime Minister Mark Carney declined to discuss details of what he described as intense and delicate negotiations with the United States.
Carney said he expects to speak with Trump before the deadline.
Canada’s minister responsible for US trade relations, Dominic LeBlanc, and its chief trade negotiator, Janice Charette, have stepped up talks with their US counterparts.
Canada and the United States are still far from reaching a draft trade deal despite regular meetings, LeBlanc told an advisory committee, according to a source.
Auto tariffs on Canadian-made vehicles have emerged as a key sticking point in the talks, two sources told Reuters on Monday.
Unlike many of Trump’s earlier tariffs, the new duties would apply even to products that qualify for preferential treatment under the US-Mexico-Canada Agreement (USMCA), which has shielded much of Canadian trade from tariffs, posing an added risk to Canada’s economy.
Last month, Trump refused to extend the USMCA agreement for another 16 years, subjecting the pact to annual reviews, a process that is likely to prolong the trade uncertainty which has sapped investments and job growth in Canada.
Individual sectors could face the brunt of these tariffs, leading to more job losses and lower growth.
Canada’s struggling wood product sector and the wine industry, already affected by raging wildfires in the country’s west, could be hit hard by the new tariffs.
Alain Ouzilleau, owner of Cabico Ltd, a custom kitchen cabinet brand in Canada, said that if the tariffs are imposed the consequences for the industry could be severe.
“A 50% tariff is not something that manufacturers can absorb, nor can we reasonably expect our US customers to absorb it. ...It could make certain Canadian-made products economically noncompetitive in the US market overnight,” Ouzilleau said.
Small and medium businesses could be particularly vulnerable as many rely on tariff-free access to US customers.
“If the tariffs come into effect...they will cause massive dislocation for small businesses that rely on US clients and buyers relying on Canadian suppliers,” said Dan Kelly, president of the Canadian Federation of Independent Business. — Reuters
