US Imposes Additional 50% Tariffs on Selected Canadian Goods

KUALA LUMPUR, JULY 2026 – United States President Donald Trump has signed three proclamations imposing additional 50% tariffs on selected imports from Canada, accusing the country of maintaining trade policies that discriminate against American products.

The new ad valorem duties will apply to certain Canadian dairy products, alcoholic beverages, motor vehicles and related goods. They are scheduled to take effect at 12.01am Eastern Time on August 19, 2026.

The measures were introduced under Section 338 of the Tariff Act of 1930. The US administration said the action was intended to address Canada’s treatment of American exports across the automotive, dairy and alcoholic beverage sectors.

Energy products, potash, fish and critical minerals will be excluded from the additional duties. Goods covered by the new proclamations will be subject to the tariffs even when they qualify for preferential treatment under the United States-Mexico-Canada Agreement, commonly known as USMCA.

Trump argued that Canada has maintained a 25% tariff on imports of US motor vehicles that do not qualify for duty-free treatment under USMCA since April 9, 2025. The administration also criticised Canada’s use of tariff-rate quotas for vehicles that would otherwise qualify for preferential access.

According to the US proclamation, Canadian imports of American motor vehicles declined by approximately 22%, falling from about US$25.9 billion between April 2024 and March 2025 to around US$20.3 billion during the corresponding period covering 2025 and 2026.

Trump claimed the Canadian measures placed American vehicle manufacturers at a disadvantage compared with businesses from other countries. Canada, however, has maintained that some of its trade actions were introduced in response to earlier US tariffs and broader pressure on Canadian industries.

The dispute also extends to alcoholic beverages. The US administration said most Canadian provinces and territories had stopped purchasing or selling certain American alcoholic products following earlier trade disputes between the two countries.

The White House argued that the restrictions harmed American producers while allowing imports from other markets to increase. Its proclamation stated that imports of alcoholic beverages into Canada from countries other than the United States rose during the period examined, despite a decline in Canada’s overall alcohol imports.

In the dairy sector, Washington criticised Canada’s tariff-rate quota system, particularly its rules governing cheese and other dairy imports. The US administration argued that the system restricted market access for American producers and treated their products less favourably.

Canadian Prime Minister Mark Carney rejected the US action, describing it as another unilateral trade measure affecting Canadian goods. He said Canada would continue defending its workers, farmers, businesses and families while responding to threats against the country’s economy and sovereignty.

The Canadian government also argued that the tariffs violated commitments under the regional free-trade framework involving Canada, the United States and Mexico. The latest action is expected to increase pressure on both governments to negotiate before the measures take effect.

The dispute comes shortly after the United States declined to extend USMCA during its mandatory six-year joint review. The agreement will now be subject to annual reviews that could continue until 2036 unless the three member countries agree on a longer extension.

The additional tariffs represent a significant escalation in trade tensions between two countries with highly integrated supply chains. Automotive manufacturing, agriculture, food processing and retail industries on both sides of the border could face higher costs if the dispute continues.

Businesses may also be forced to reassess supply chains, pricing strategies and cross-border investment plans. Consumers could eventually face higher prices if importers pass the additional duties on through the cost of vehicles, food products and alcoholic beverages.

Industry representatives have warned that further retaliation could deepen uncertainty for companies already facing financial pressures. The Distilled Spirits Council of the United States said additional duties could increase the risk of countermeasures and create further difficulties for hospitality businesses.