US, Canada hold last-minute talks to stop 50% U.S. tariffs on $20
billion worth of Canadian goods
[August 18, 2026] By
PAUL WISEMAN and ROB GILLIES
WASHINGTON (AP) — The United States and Canada have wrangled for decades
over trade, poking each other interminably over sore spots like Canadian
softwood lumber imports and U.S. access to Canada’s protected dairy
market.
Somehow the two neighbors still managed to remain friends, allies — and
trading partners. Canadian soldiers fought alongside Americans in
Afghanistan after 9/11. The 5,525-mile U.S.-Canada border is undefended,
and nearly 330,000 people and $2 billion dollars’ worth of goods cross
it every day; 800,000 Canadians live in the United States.
President Donald Trump’s belligerent approach to dealing with Canada
marks an extraordinary departure from the traditionally cooperative
relationship between the two countries. Trump has hit Canadian goods
with tariffs — in a push to bring manufacturing back to the United
States — and has repeatedly made inflammatory comments about turning
Canada into America’s 51st state.
The Canadian public is fed up. A petition to expel the U.S. ambassador,
a Trump ally, has collected nearly 218,000 signatures since July 21. It
accuses Ambassador Pete Hoekstra of having “normalized’’ Trump’s talk of
annexing Canada, among other things.
Tension could hit new heights at 12:01 a.m. Wednesday if Trump goes
ahead with his plan to impose 50% tariffs on $20 billion worth of
Canadian products, ranging from hockey sticks to tongue depressors.
As the deadline approaches, the two countries are seeking a truce that
would avoid the new round of tariffs.
″We are negotiating,” Canadian Prime Minister Mark Carney told reporters
Monday, speaking in French. “The negotiations are very intense and
delicate. This is not the time to talk about negotiations in public.”
Looking for an off ramp
Nearly 72% of Canadian goods exports last year went to the United
States. And the Trump administration might be wary of imposing a hefty
new tariff — paid by U.S. importers who try to pass along the cost to
consumers via higher prices — ahead of November’s midterm elections.
American voters are already frustrated with the high cost of living.
“I don’t think either side really wants these tariffs to come into
effect,’’ said Ryan Majerus, a partner at King & Spalding and a former
U.S. trade official. “There’s a pretty strong push on both sides to find
an off ramp here.’’
Majerus said the United States is aiming to get Canada to buy more U.S.
military equipment, including F-35 fighters; to take part in Trump’s
“Golden Dome’’ missile defense; and to give the United States more
access to critical minerals, thereby reducing America’s reliance on
tenuous supplies from geopolitical rival China.
The Canadians would like relief from U.S. tariffs on steel and aluminum
as well as softwood lumber, which America says receives unfair
government subsidies.
Trump relies on Smoot-Hawley to go after Canada
Trump has made tariffs the centerpiece of his second-term economic
agenda. Last year, he imposed double-digit import taxes on almost every
country on earth, justifying them by declaring the longstanding U.S.
trade deficit a national emergency. The Supreme Court in February ruled
that he’d overstepped his authority, striking down those tariffs and
setting the stage for the federal government to pay refunds to
importers.
Trump immediately looked for other ways to rebuild his tariff wall. Last
month, he imposed import taxes of 10% to 12.5% on 59 countries and the
European Union — which together account for 99% of U.S. imports — for
allegedly failing to have or to enforce restrictions on imports made
from forced labor.
Then he reached back to the Great Depression to find a cudgel with which
to whack Canada, one of his favorite targets.
[to top of second column] |
United States Trade Representative Jamieson Greer, center, leaves
the U.S. Department of Commerce following a meeting with Canadian
officials, in Washington, Monday, Aug. 17, 2026. (Kelly Geraldine
Malone/The Canadian Press via AP)
 Trump invoked Section 338 of the
Tariff Act of 1930 to impose 50% tariffs on products that account
for about 5% of Canadian exports to the United States.
Nearly a century ago, with the U.S. and world economies in collapse,
Congress passed the 1930 tariff law, imposing hefty taxes on imports
from around the world. Known as the Smoot-Hawley tariffs, for their
congressional sponsors, they are notorious among economists and
historians for limiting world commerce and making the Great
Depression worse.
Section 338 tariffs have never been used before. U.S. trade
negotiators traditionally have favored another tool, Section 301 of
the Trade Act of 1974 — the provision Trump invoked for last month’s
forced-labor tariffs.
Section 338 authorizes the president to impose tariffs of up to 50%
on imports from countries that have discriminated against U.S.
businesses. Unlike Section 301 sanctions, no investigation is
required. Nor is there any limit on how long the tariffs can stay in
place.
In announcing the Section 338 tariffs, Trump claimed that Canada
discriminates against American exports of autos, alcohol and cheese.
Trump is angry because Canada and China were the only countries that
punched back with retaliatory tariffs of their own when he slapped
levies on their products last year.
“If a country retaliates against us, we’re obviously not going to
tolerate that,” U.S. Trade Representative Jamieson Greer told
reporters Friday at the Iowa State Fair. “We’ll take action. My
sense is the Canadians, they want to have a more conciliatory
approach, but we’ll see.”
New leverage to renegotiate USMCA
The U.S. is renegotiating a North American trade pact — the
US-Mexico-Canada Agreement — that Trump strong-armed America’s
neighbors into accepting in his first term. The threat of Section
338 tariffs gives the United States leverage to seek fresh
concessions from Ottawa.
“From Carney's perspective, you need (USMCA) to be renegotiated,''
said Christopher Gundermann, fellow in the economics program at the
Center for Strategic and International Studies. ”You can't
renegotiate it with a massive trade war going on.''
But the Canadian public’s furor over Trump’s policies may limit
Carney’s ability to cut a deal. Canada could retaliate again if the
new 50% tariffs take effect, potentially aggravating a trade fight.
Canada’s government “cannot look like it is simply caving to the
Trump administration’s demands,’’ said Daniel Béland, a political
science professor at McGill University in Montreal. “Making further
concessions without getting something meaningful in exchange would
probably lead to a strong backlash ... The risk is for the Carney
government to make Canada look weak and, therefore, even more
vulnerable to future trade and geopolitical bullying on the part of
the Trump administration.”
Dominic LeBlanc, Canada’s minister for U.S. trade, met with Greer on
Monday. He was tight-lipped afterward.
“The work is continuing,’’ he said. “We continue to do our job.’’
____
Gillies reported from Toronto.
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