Trump imposes 50% tariffs on Canadian alcohol, dairy and automobiles

The White House on Monday signed three executive trade actions to impose 50% tariffs on Canadian alcohol, dairy and automobiles, including products that are compliant with the U.S.-Mexico-Canada agreement.

The action marks the latest escalation in the ongoing trade dispute between the Trump administration and Canada. The three proclamations would carve out exemptions for potash – a key fertilizer component – fish and critical minerals, according to a White House fact sheet. The tariffs will go into effect in 30 days.

"Today, President [Donald] Trump took decisive action to hold Canada accountable for its retaliation and discrimination, delivering on his promise to correct trade imbalances and ensure fairness for American workers, farmers, and businesses,” U.S. Trade Representative Jamieson Greer said in a statement.

Trump has tariffed the country on numerous occasions, using the International Emergency Economic Powers Act, or IEEPA, and Section 122 of a 1974 trade law, both of which faced legal challenges.

The administration this time opted to use a Great Depression-era authority known as Section 338 that allows the president to impose levies up to 50% on countries that discriminate against the U.S. or unreasonably burden U.S. commerce. A senior administration official said on a call with the press that Sec. 338 has never been used for this purpose before, much like IEEPA and Sec. 122.

Greer said in the statement that the action is needed because of Canada's retaliation. 

"While the Administration continues to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to rebalance trade and protect U.S. industry in national-security sensitive sectors," Greer said.

Under IEEPA, the administration imposed a 35% tariff on Canada for most goods that are not USMCA-compliant, including a 10% tariff on potash. The Supreme Court ultimately struck down those tariffs in February before the administration pivoted by imposing a 10% global tariff under Sec. 122. Those levies are set to expire July 24.

The president also imposed several tariffs on steel, aluminum, automobiles and lumber under Sec. 232. The Sec. 338 tariffs exempts products already subject to Sec. 232 tariffs.

Canada largely reacted to the administration's trade actions by pulling American alcohol off of their shelves. The official said that all but two Canadian provinces and territories have halted the purchase, distribution or retailing of U.S. alcoholic beverages.

"Beginning in March 2025, all Canadian provinces and territories halted the purchase, distribution, or retailing of U.S. alcoholic beverages," the White House alcohol proclamation says. "Only the provinces of Alberta and Saskatchewan subsequently lifted their bans on the purchase, distribution, or retailing of U.S. alcoholic beverages, in June 2025."

The official also pointed to actions by Canada that restrict the trade of U.S. cheese. Canada has a set tariff-rate quota that allows a certain amount of U.S. cheese to enter the country duty-free under the USMCA. Without the TRQs, U.S. producers would have to pay a tariff rate of about 245%, according to the University of Wisconsin-Madison. 

The USMCA also has a similar set-up for other dairy products. The U.S. dairy industry has long said that Canada isn’t abiding by the terms of the agreement.

The official said the TRQs on U.S. cheese are more restrictive than the ones imposed on the European Union. 

"By making retailers ineligible to use the USMCA TRQ for cheeses of all types, Canada discriminates against U.S. goods that are similar to EU goods that are entered pursuant to the CETA cheese of all types TRQ.  Canada thus denies to the United States the favorable treatment that Canada provides to the EU and its member States," the White House dairy proclamation says.

The official also cited issues with Canada’s tariffs and quotas on cars imported to the country. 

The latest tariff action comes days after Trump threatened to impose tariffs on Canada because of the wildfire smoke that is filling the skies along the U.S. East Coast.

“We are holding Canada responsible for the fact that they are not properly maintaining their Forests, and Brush therein, and the United States is being unnecessarily invaded by filthy, polluted, and unhealthy air, the quality of which is dangerous, and totally unacceptable!” Trump said on Truth Social on July 17. “This is Willful Negligence, and becoming a yearly occurrence, costing the United States Billions of Dollars, which cost of this pollution must of necessity be added to the TARIFFS Canada is currently paying.”

The official said the Sec. 338 tariffs are not related to the wildfires, but the administration is looking at options to impose those levies.

For more news, go to Agri-Pulse.com.