Trump imposes 50% tariffs on Canadian goods, citing disputes over autos,
alcohol and cheese
[July 21, 2026] By
JOSH BOAK
WASHINGTON (AP) — President Donald Trump on Monday imposed 50% tariffs
on most Canadian goods, declaring that Canada has unfairly discriminated
against American autos, alcohol and dairy products.
The move could unleash a new wave of economic chaos, with risks of
higher inflation and further fraying of relations between two nations
that had been closely woven together before Trump's return to the White
House. The administration official previewing the action said that
Canada was one of the only nations other than China that retaliated
against Trump's previous tariffs and must be held accountable.
The official insisted on anonymity on a call with reporters to preview
the president's actions and said that Trump signed three proclamations
to launch the tariffs under Section 338 of the 1930 Trade Act. Several
Democratic lawmakers last year proposed repealing the section because
they said Trump could use it to destabilize the economy.
The new 50% tariffs would exclude energy products, potash, fish and
critical minerals, but they would include goods that had previously been
protected from import taxes by the United States-Mexico-Canada
Agreement, or USMCA. That 2020 trade pact was not renewed by the U.S.,
triggering a new set of negotiations that could run until 2036.
The White House said in a fact sheet that the tariffs would go into
effect in 30 days, meaning there is time for negotiations as Trump has
not always followed through on his announced tax hikes on imports.
Canadian Prime Minister Mark Carney said in a statement that his
government believes in the “benefits of free and fair trade,” having
signed “more than 20 new economic and security partnerships." He said
Canada is prepared to negotiate with the Trump administration.
“This trade dispute has raised costs for families, particularly in the
U.S.,” Carney said. “Canada stands ready to engage intensively to
address outstanding issues with the U.S. to the mutual benefit of our
citizens.”
Canada faces the risk of a broader trade war
Still, the tariffs could escalate into a wider trade war as Canada seeks
to defend its economy. Ontario Premier Doug Ford saw a possible showdown
ahead.
“If these tariffs proceed, Canada should respond tariff for tariff,
dollar for dollar,” Ford posted on social media.
Candace Laing, CEO of the Canadian Chamber of Commerce, said the Trump
administration's moves were “regrettable” but the two countries need to
use the 30-day window before the tariffs start "to make meaningful
progress in advancing formal talks.”
Chris Swonger, CEO of the Distilled Spirits Council of the United
States, also called for a deal: "We encourage policymakers on both sides
of the border to pursue a negotiated solution that restores market
access for U.S. spirits and avoids further harm to the U.S. hospitality
sector.”
But the use of a Great Depression-era law to impose the tariffs broadens
some of the risks, as those tariffs could be applied to other U.S.
trading partners, not just Canada, and inject “massive uncertainty” into
the global economy, said Scott Lincicome, vice president of general
economics at the Cato Institute, a libertarian think tank.
“We crossed the Rubicon,” Lincicome said. “The invocation of 338 is the
nuclear option for Trump tariffs.”
Tariffs are also a political challenge for Trump
The new tariffs carry serious political and economic risks for Trump
ahead of the November midterm elections for control of Congress. His
“Liberation Day” tariffs last year in April provoked a financial market
meltdown over concerns about inflation and a recession, prompting him to
walk back the rates for a period of negotiation.
[to top of second column] |
Canada Prime Minister Mark Carney speaks during a media availability
in Jeddah, Saudi Arabia, Thursday, July 9, 2026. (Adrian Wyld/The
Canadian Press via AP)
 The Supreme Court ruled this
February that Trump had lacked the legal authority to impose the
tariffs by declaring an economic emergency, causing the
administration to find alternative ways to raise import taxes based
on a series of legal authorities.
Tariffs are taxes on imports, which companies can then pass along to
consumers in the form of higher prices. The president maintains that
the costs created by tariffs will cause manufacturing to relocate to
the U.S., though there is little evidence of that in the economic
data.
“These new taxes will raise prices on American families and likely
lead to retaliation against the very industries Trump purportedly
wants to protect,” said Rep. Suzan DelBene, D-Wash., who is chair of
the Democratic Congressional Campaign Committee.
The latest import taxes could worsen Trump's weak ratings on the
economy. He promised voters when running for the presidency that he
would bring prices down, but the annual inflation rate has risen
since he became president because the tariffs and the war in Iran
are pushing up oil prices.
Trump has repeatedly targeted Canada on trade issues
The Trump administration official said the president had also
requested that his aides look into additional tariffs on Canada
because its wildfires hurt air quality in the U.S. He had publicly
threatened to do so in social media posts.
At the World Cup final on Sunday, Trump watched the game with
Carney. The Trump administration official said their time together
at the game was not a working visit to discuss trade and tariffs.
Trump claims in the proclamations that Canada discriminates against
American autos, alcohol and cheese relative to other nations, but
his argument rests in large part on retaliatory actions taken by
Canada after the U.S. president imposed tariffs on Canada under the
pretext that it should do more to stop fentanyl smuggling.
Trump noted in his autos proclamation that Canada maintained,
starting in April 2025, a 25% tariff on the imports of U.S. motor
vehicles that did not qualify for preferential treatment under the
USMCA.
The White House said that, regarding alcohol, all but two Canadian
provinces and territories halted the purchase and retailing of
American alcoholic beverages beginning last year, which was also a
response to Trump's tariffs and taunts of making Canada the 51st
state.
But Trump has long objected to Canada's treatment of U.S. cheese,
saying in his proclamation that Canada discriminates against the
U.S. compared to Europe on dairy products.
Trump and Carney have had a frosty relationship, with Carney, a
former central banker, who pledged to go “elbows up” for Canada
during his election campaign last year.
At the World Economic Forum in Davos, Switzerland, in January,
Carney called out Trump — without naming him — by saying that the
“most powerful” countries are using the economy to coerce less
powerful nations.
Trump responded at the time by saying: “Canada lives because of the
United States."
___
Associated Press writer Jim Morris contributed from Vancouver,
British Columbia.
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