BUSINESS & ECONOMY
WASHINGTON—President Donald J. Trump moved to escalate his trade conflict with Canada on Tuesday, banning imports of selected Canadian products, revising tariffs on others and directing agencies to curtail purchases of Canadian goods.
The measures, issued under Section 338 of the Tariff Act of 1930, are the Administration’s response to Canada’s latest retaliatory tariffs on roughly $20 billion of U.S. exports. Canadian alcohol, dairy products, and motorcycles are among the goods facing import bans, while other products will be added to or removed from an existing tariff list.
The Administration said the import bans would take effect on September 29. Changes to the tariff list, including the removal of items such as cement and rock salt and the addition of goods including all-terrain vehicles, selected cheeses, and motorboats, will take effect on September 15.
U.S. Officials argued that the changes were designed to limit disruption to U.S. supply chains, exempting some products where domestic supply is limited or certain regions rely heavily on Canadian imports. They said the new bans and levies were intended to match what the White House views as Canada’s discriminatory treatment of U.S. alcohol, dairy and vehicles.
The White House also said it would remove Canadian-origin products from the federal government’s Multiple Award Schedules, potentially affecting access to a procurement market it estimated at $50 billion.
The latest action from the U.S. raises the stakes in a relationship that has become one of the Trump administration’s sharpest trade disputes.
Trump’s planned increase in auto tariffs to 50 percent on January 1 remains in effect, according to an Administration official, though the official said the U.S. remains open to a negotiated settlement with Canada.
From USMCA Integration to Trade Confrontation
The trade dispute has unfolded between two economies built around exceptionally close trade ties. On one side, the U.S. wants reciprocity, arguing that Canada has trade barriers that disadvantage American companies, particularly in dairy, alcohol, and automobiles. The Trump Administration wants to force Canada to further open its markets. Canada, on the other hand, says the U.S. is using economic pressure unfairly and is particularly concerned that the US is undermining the rules of the USMCA. Canada’s Prime Minister Mark Carney’s government has responded with retaliation while trying to reduce Canada’s dependence on the American market.
President Trump, who, during his first presidency, replaced the North American Free Trade Agreement with the U.S.-Mexico-Canada Agreement, has long argued that the old North American trading system disadvantaged American workers and contributed to U.S. trade deficits. In recent months, as previously reported by Africa Bazaar, he has publicly said he only negotiated and signed the USMCA because he didn’t like NAFTA and is now arguing that the USMCA hasn’t gone far enough to address what he considers unfair Canadian barriers
With both countries locking horns in their trade fight and neither looking to budge, that means both American and Canadian consumers will feel the tariffs impact.
For now, the direct economic impact of the latest tariff measure is modest relative to the scale of the U.S. economy, officials said. The import bans cover goods worth several billion dollars, while the tariff revisions are a modest change affecting about $20 billion already covered. The larger risk is the cumulative effect on Canadian exporters and tightly linked supply chains, particularly in autos, metals, construction materials and food, if the dispute does not end.
The impact on households is likely to be gradual rather than immediate. Auto production and manufacturers depend on cross-border parts and materials, while construction relies on Canadian steel, aluminum, lumber, and related inputs. Food and fuel prices also remain exposed to disruption in North American trade. A prolonged dispute could add to costs for businesses and consumers and in some sectors, weigh on investment and employment.
Businesses can partially mitigate the costs by qualifying goods for USMCA treatment, changing suppliers, passing costs to consumers, or absorbing them through lower margins. But each option has trade-offs. A Dallas Federal Reserve survey found that firms facing elevated tariffs,= commonly raised prices, absorbed costs internally, or sought new suppliers.
Canada has not indicated whether it will retaliate further but during the G20 Finance Ministers and Central Bank Governors Ministerial in Asheville, North Carolina last week, when asked if he saw a path forward from the trade tensions, Canadian Finance Minister François Philippe Champagne told the Africa Bazaar he’s optimistic there will be a resolution between the U.S. and Canada. “I am always trying to see a way forward, Secretary Bessent and I know each other, we respect each other and very much looking forward to discussing with him.”
U.S. officials on Tuesday said they had held constructive recent conversations with Canadian counterparts, leaving open the possibility that both sides could yet seek an off-ramp before the new measures take effect.
The broader question is whether the two countries can negotiate a North American trade path that will restore predictability in trade or whether businesses need to start moving supply chains elsewhere. For now, the USMCA’s future hangs by a thread.
