Trump hits Canada with 50% tariffs on electrical equipment and machinery, Carney warns of protective measures for the economy

The United States has taken a new step in escalating trade tensions with its northern neighbor, as President Donald Trump announced on Monday a new wave of tariffs on Canada. This move marks a significant deterioration in relations with one of Washington’s closest economic partners.

The new measure includes a 50% tax on a wide range of Canadian products, particularly electrical equipment and machinery. This rate is among the most aggressive ever imposed by the Trump administration on a trading ally.

White House officials clarified that these tariffs are unrelated to Trump’s previous threats, which had been mentioned as a response to pollution from fires that affected northern US regions. They constitute an independent trade action.

According to the official announcement, the tariffs will take effect within a month and will cover Canadian imports worth a total of about 20 billion dollars.

For his part, Canadian Prime Minister Mark Carney reiterated his country’s commitment to an open and balanced trading system. “Regardless of the circumstances, Canada will continue to take every necessary step to consolidate our economy and protect Canadian workers, farmers, businesses, and families,” he said.

Meanwhile, Doug Ford, the premier of Ontario province, called for a swift and proportional response. He stated on the X network that if these tariffs are not removed, Canada will be forced to respond in kind, imposing equal taxes on American products.

The legal basis used by Trump is Section 338 of the Tariff Act of 1930, an instrument that authorizes the president to apply tariffs of up to 50% on nations that discriminate against American goods. The uniqueness of this move lies in the fact that this section had never been used in this way before.

Despite the severity of the measures, some strategic Canadian products remain exempt from this tariff. These include energy products, critical minerals, fish, and other items already covered by sectoral tariffs, such as vehicles and metals.

Another important change is that products covered by the US-Mexico-Canada Agreement (USMCA), which is currently being renegotiated, will no longer enjoy exemption from these tariffs, unlike previous actions.

According to analysis by the firm Capital Economics, the direct impact of the new tariffs will be relatively limited, affecting only about 5% of imports from Canada, or roughly 0.6% of total US imports.

However, experts warn that if the use of Section 338 gets a judicial green light, it could become a powerful weapon for the Trump administration in future international trade negotiations.

Tariffs remain a central pillar of Trump’s economic strategy, which he has repeatedly used as a pressure tool against America’s major global trading partners.

This move comes after a legal setback in February, when the Supreme Court blocked the president’s attempt to impose universal tariffs through the International Emergency Economic Powers Act (IEEPA). That ruling scuttled plans to tax all global imports and to impose additional tariffs on China, Canada, and Mexico.

As an alternative, Trump applied temporary 10% tariffs relying on Section 122 of the Trade Act of 1974, which are expected to expire in the coming days.

Also, last week, the US imposed 25% tariffs on a range of Brazilian products, activating Section 301 of the Trade Act, following an investigation into Brazil’s trade practices.

The US administration has signaled that other punitive measures are also being prepared for China, America’s main economic rival, which already faces tougher barriers than many other countries. Although the tariff issue was not discussed at the May summit between Trump and Chinese President Xi Jinping, the latter plans a visit to the US in September.

In its statement, the White House underlined that Canada was one of two countries that chose the path of tariff retaliation, rather than negotiations, in response to US actions. The other country that followed the same line was China.