Trump imposes 50% tariffs on Canadian goods, due to disputes over cars, alcohol and cheese

WASHINGTON (AP) — President Donald Trump on Monday imposed 50% tariffs on most Canadian goods, declaring that Canada is unfairly discriminating against American cars, alcohol and dairy products.

The move could unleash a new wave of economic chaos, with the risk of higher inflation and further deterioration of relations between the two countries that were closely woven before Trump returned to the White House. The administration official who reviewed the action said Canada was one of the only countries, other than China, to respond to Trump’s previous tariffs and should be held accountable.

The official insisted on anonymity during a call with reporters to preview the president’s actions, and said Trump had signed three proclamations to trigger tariffs under Section 338 of the 1930 Trade Act. Several Democratic lawmakers last year proposed repealing the provision because they said Trump might use it to destabilize the economy.

The new 50% tariffs will exclude energy products, potash, fish and critical minerals, but will include goods previously protected from import taxes under the United States-Mexico-Canada Agreement, or USMCA. The United States did not renew the trade agreement for 2020, triggering a new set of negotiations that could last until 2036.

The White House said in a fact sheet that the tariffs would take effect in 30 days, meaning there is plenty of time for negotiations since Trump has not always followed through on his announced tax increases on imports.

However, the tariffs could escalate into a broader trade war as Canada seeks to defend its economy.

The Canadian federal government did not immediately comment on the tariff, but Ontario Premier Doug Ford predicted a potential confrontation in the future.

“If these tariffs continue, Canada must respond with tariffs, dollar for dollar,” Ford said on social media.

The tariffs also pose a threat to other trading partners of the United States, not just Canada, and inject “tremendous uncertainty” into the global economy, said Scott Lincecome, vice president of public economics at the Cato Institute, a libertarian think tank.

“We crossed the Rubicon,” Lincecum said. “Invoking Section 338 is the nuclear option for Trump’s tariffs.”

The new tariffs carry serious political and economic risks for Trump ahead of the November midterm elections to take control of Congress. The tariffs imposed on last year’s “Liberation Day” in April sparked a collapse in financial markets due to concerns about inflation and recession, forcing him to hold back on prices for a period of negotiations.

The Supreme Court ruled last February that Trump lacked the legal authority to impose tariffs by declaring an economic emergency, prompting the administration to find alternative ways to increase import taxes based on a series of legal authorities.

Tariffs are taxes on imports, which companies can then pass on to consumers in the form of higher prices. The president asserts that costs resulting from tariffs will cause manufacturing to move to the United States, although there is little evidence of this in economic data.

The latest import taxes may exacerbate Trump’s poor ratings for the economy. He promised voters when he ran for president that he would lower prices, but the annual inflation rate has risen since he became president because tariffs and the war in Iran are pushing up oil prices.

The Trump administration official said the president has also asked aides to consider additional tariffs on Canada because wildfires are hurting air quality in the United States, and he has publicly threatened to do so in his social media posts.

In the World Cup final on Sunday, Trump watched the game with Canadian Prime Minister Mark Carney, who openly defied the US president and sought to expand Canada’s trade relations with other countries. The Trump administration official said the time they spent together at the game was not a business visit to discuss trade and tariffs.

In his statements, Trump claims that Canada discriminates against American cars, alcohol and cheese compared to other countries, but his argument relies largely on retaliatory measures taken by Canada after the US president imposed tariffs on Canada, arguing that it should do more to stop fentanyl smuggling.

In his auto announcement, Trump noted that, as of April 2025, Canada maintained a 25% tariff on U.S. auto imports that do not qualify for preferential treatment under the USMCA.

Regarding alcohol, the White House said that all but two Canadian provinces and territories halted purchases and retail sales of American alcoholic beverages beginning last year, which was also a response to Trump’s tariffs and his mockery of making Canada the 51st state.

But Trump has long objected to Canada’s treatment of American cheese, saying in his announcement that Canada discriminates against the United States compared to Europe when it comes to dairy products.

The relationship between Trump and Carney has been frosty, with Carney, the former central bank governor, vowing to defend Canada during his election campaign last year.

At the World Economic Forum in Davos, Switzerland, in January, Carney criticized Trump – without mentioning him by name – by saying that “stronger” countries use the economy to coerce less powerful countries.

Trump then responded by saying: “Canada lives because of the United States.”

Associated Press writer Jim Morris contributed from Vancouver, British Columbia.