Canada faces 50% US tariffs as trade talks remain deadlocked
US tariffs of up to 50% on Canadian goods take effect Wednesday, covering wine, dairy, furniture and more, as negotiators fail to bridge differences.
Canada is bracing for a fresh wave of US tariffs this week, with Washington set to impose duties of up to 50% on a broad range of Canadian imports starting Wednesday. The move, which covers nearly $20 billion worth of goods, threatens to disrupt industries already facing headwinds and complicate ongoing negotiations over the future of the USMCA trade pact.
The tariffs, announced by US President Donald Trump last month, target products including wine, furniture, dairy, cement, clothing, fishing rods and hockey equipment. They are being imposed under Section 338 of the Tariff Act of 1930, a Depression-era provision that allows the president to levy punitive duties on trading partners deemed to have discriminated against American goods.
Canadian officials, led by Trade Minister Dominic LeBlanc and chief negotiator Janice Charette, have intensified talks with their US counterparts in recent weeks. LeBlanc has met US Trade Representative Jamieson Greer five times in four weeks, including a virtual session on Sunday. Despite the flurry of activity, the two sides remain far from a draft agreement, according to a source briefed on a Friday advisory committee call. Both Canadian officials stayed in Washington over the weekend to continue discussions.
Unlike earlier US tariffs, the new duties will apply even to goods that qualify for preferential treatment under the USMCA, which has previously shielded much of Canadian trade. This broad application adds fresh risk to Canada's economy, which counts the US as its second-largest trading partner.
Industry leaders warn the impact could be severe, particularly for small and medium-sized businesses that depend on tariff-free access to American customers. Alain Ouzilleau, owner of Canadian custom kitchen cabinet brand Cabico Ltd, said a 50% tariff would make many Canadian products uncompetitive in the US market almost overnight. Dan Kelly, president of the Canadian Federation of Independent Business, said the duties would cause "massive dislocation" for small firms on both sides of the border.
Sectors already under strain, such as Canada's wood products industry and wine producers hit by wildfires in the west, could face further job losses. Economists note the tariffs' macroeconomic impact may be limited, but the broader risk lies in derailing USMCA talks. Key sticking points include Canada's dairy system and the removal of US alcohol from stores in several provinces, with dairy described by US agriculture officials as the most contentious issue.
The Tariff Act of 1930 is historically associated with sweeping US tariff hikes and retaliation that economists say worsened the Great Depression.