US Imposes 50% Tariff on Canadian Equipment and Machinery, Carney Warns of Retaliation

US President Donald Trump announced a series of new tariffs on Canada on Monday, further straining relations with one of Washington’s oldest allies and key economic partners.

The new measure, set at 50%, will hit a range of Canadian products, including electrical apparatus and mechanical equipment. These are among the steepest tariff rates ever imposed by the current administration on a trading partner.

Although President Trump recently threatened the neighboring country with sanctions over air pollution from wildfires that spread across the northern United States, senior officials said the newly announced measure was unrelated to that situation.

White House officials said the tariffs would take effect within a month and would apply to Canadian products worth around $20 billion.

For his part, Canadian Prime Minister Mark Carney stressed that his country would not back down from its commitment to a free and fair trading system.

“Regardless of the situation, Canada will take every necessary step to boost the economy and stand behind our workers, farmers, businesses and families,” he said.

Meanwhile, Ontario Premier Doug Ford called on the federal government to respond immediately to the US actions.

“If these duties remain in place, our response must be reciprocal: we will answer every dollar in tariffs with a dollar in tariffs,” he said in a post on the X platform.

President Trump based his decision on Section 338 of a 1930 law, a provision authorizing the president to impose duties of up to half the value of goods from countries that penalize American products. However, this legal authority had never previously been used for such a purpose.

Several essential categories of imports will be exempt from the package, including energy products, rare minerals, fish, and goods already subject to sector-specific tariffs, among them vehicles and metals.

Unlike previous measures, there will now be no exemptions even for goods protected under the US-Mexico-Canada free trade agreement, which is itself undergoing renegotiation.

According to analysts at Capital Economics, only around 5% of US purchases from Canada, equivalent to approximately 0.6% of total US imports, will actually be affected by these sanctions.

However, if the use of this legal provision is upheld in court proceedings, it could become a powerful instrument of pressure for the Trump administration in future rounds of trade negotiations.

Tariffs remain a central pillar of President Trump’s economic philosophy and have repeatedly been used as a tool to pressure America’s major economic partners.

Last February, the Supreme Court blocked the president’s attempt to impose universal tariffs through the International Emergency Economic Powers Act. That ruling ended the plan to tax imports from all countries, including additional measures targeting China, Canada and Mexico.

As a result of this legal setback, Trump imposed temporary 10% tariffs under a different law dating from 1974, which are expected to expire at the end of this week.

Meanwhile, last week the US imposed 25% tariffs on a range of goods from Brazil, relying on another legal provision following an investigation into Brazilian trade practices.

US authorities have also signaled further tariffs against China, the United States’ main economic rival, which already faces greater trade barriers than many other countries. Although tariffs were not the focus of talks at the May summit between the leaders of the two countries, Chinese President Xi Jinping is expected to make an official visit to the US in September.

In its announcement, the US administration noted that Canada was one of only two countries to pursue retaliatory tariff policies rather than enter into dialogue. The other country mentioned was China.