U.S. - Canada tension rises: Canadian PM Mark Carmey doesn’t hold back on Trump’s new tariff threat

President Donald Trump is trying to brow beat Canada into making significant concessions on changes to the United States-Mexico-Canada Agreement (USMCA), a trilateral trade treaty negotiated by the Trump administration 1.0 that replaced NAFTA in 2020. He is using the threat of his preferred bludgeon, tariffs.

On Monday, Trump signed three presidential proclamations that will impose a 50% tariff on a number of Canadian goods, including some protected from import levies under USMCA. In a press release from the White House, the administration says that “President Trump is offsetting the burden and disadvantage on U.S. commerce from Canada’s discriminatory treatment of U.S. commerce and is leveling the playing field for crucial American exports—cars, alcohol, and dairy.”

He is justifying the action under Section 338 of the 1930 Trade Act, a law that has never been used before by a U.S. president, intended to prevent trading partners giving other countries better import tax rates than the U.S. “The invocation of 338 is the nuclear option for Trump tariffs,” Scott Lincicome, vice president of general economics at the Cato Institute, a libertarian think tank, told PBS, adding, “we crossed the Rubicon.”

“It is ironic, to say the least, to use this authority to impose tariffs to retaliate against tariffs that were imposed in response to actions taken by the U.S.,” said John Veroneau, senior counsel with Washington, D.C.-based Covington and Burling law firm who also served as a trade official in the George W. Bush administration, speaking to Reuters.

While the Supreme Court declared previous tariffs imposed by the White House using emergency powers illegal, this law has not been tested in court. The new tariffs are set to go into effect on August 19, 2026.

Canadian PM vows to “intensify” trade talks, and “take any measures necessary” to support Canada

Canadian Prime Minister Mark Carney responded to Trump’s new tariffs Monday evening in a statement. He said that his country “has made a series of detailed and comprehensive proposals to resolve this dispute and to modernize [USMCA].”

“We stand ready to intensify those discussions in the coming weeks,” Carney added.

But the Canadian PM made sure to let it be known that his country will not roll over in the face of this latest threat to Canada’s economy. “In all circumstances, Canada will work relentlessly and take any measures necessary to build our strength at home and to support Canadian workers, farmers, businesses, and families,” Carney’s statement concluded.

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