President Trump’s latest escalation involving tariff threats against Canada appears to be designed to give the United States more trade negotiation leverage. This, according to Canadian Prime Minister Mark Carney and Canadian provincial premiers who met in Prince Edward Island at the annual First Ministers Conference this week.
Last Monday, Trump signed a series of executive orders to impose a 50 percent tariff on a broad range of Canadian goods, including electronics, honey, Canadian liquor, cement, as well as some construction and farm equipment. Some items to be tariffed were previously exempt under the existing USMCA terms. This new 50 percent tariff is to be implemented on August 19th. Exports like energy products, critical minerals, and Potash remain exempt at this point.
Carney responded to the latest U.S. tariff announcement, saying that Canada is in a better economic position since the U.S. trade war began, citing several new international trade agreements. But he said that the Canadian negotiation team will escalate its efforts to make a deal with the United States if possible.
“On Monday, the U.S. Administration announced its intentions to impose the latest in a series of unilateral, unwarranted trade actions. The Canadian government will do whatever it takes to defend and support our workers and our business. We are in a stronger position than we were when this trade war started 18 months ago.”
The Trump administration cited Canada’s supply-managed dairy, bans on U.S. alcohol at provincial retail outlets, and cap-quotas on American vehicles to justify the new tariffs. As well, U.S. Trade Representative Jamieson Greer said that these new tariffs are a ‘natural consequence’ of Canada’s retaliation measures against President Trump’s ongoing tariff policies to fight the U.S. trade deficit.
“In April of 2025, the President embarked on a new trade policy of getting the trade deficit down after exploding for decades. Of all the countries who retaliated against the United States, one was China and the other was Canada. And so, we have a tailored action which is a natural consequence of the Canadian retaliation. We’re taking a targeted measure to counter that retaliation.”
Greer also admitted that his office did have Canada trade negotiations in mind when Trump’s executive order implemented the 30-day countdown for the new tariffs.
This latest tariff threat against Canada was ordered under section 338 of the 1930 Smoot-Hawley Act, enacted at the outset of the Great Depression. Adrian Morrow, a trade analyst based in Ottawa, says that the Smoot-Hawley Act was implemented to protect the U.S. economy. But it actually extended the Great Depression through damages that it inflicted.
“This Section 338 is part of the legislation passed in 1930 near the start of the Great Depression. The thinking at the time was that if you build this tariff wall around the United States, you can keep out imports, help domestic industry, and then that will revive the economy. The exact opposite happened. The U.S. triggered a global trade war. Unemployment went up. Economic activity went down. The economy massively contracted. Smoot-Hawley is blamed for making the Depression far worse than it needed to be.”