President Donald Trump imposed 50% tariffs on about $20 billion of Canadian imports after trade talks collapsed, and Canada answered with dollar-for-dollar tariffs up to 50% on about the same value of U.S. imports. The fight now lands on ordinary businesses, workers and consumers while the people at the top trade threats and legal theories across the border. Canada’s retaliatory tariffs are set to start Sept. 8, 2026.
Who Gets Hit First
Canada’s response has been broad and targeted. Mélanie Joly, Canada’s minister of industry, said, “We’re also targeting products that will target states in the U.S. We’re being wise and strategic to put political pressure.” She also said, “We’ve always been clear that we need to put pressure. I think in the U.S. they are very much aware of that.” That’s the language of statecraft: pressure, retaliation, leverage. The costs don’t stay in the ministerial briefing room. They move through supply chains, store shelves and payrolls.
Canada announced tariffs from 15% to 50% on about $20 billion in U.S. imports. The duties included a 50% tariff on milk and cream, 25% on cheese, a 50% tariff on toilet paper and facial tissue and on the wood pulp used to make it, and a 25% tariff on appliances such as stoves, dish washers, refrigerators and freezers. Canada initially set retaliatory tariffs on seafood, but Joanne Thompson, the minister of fisheries, said Aug. 27 the category was removed because the industry drives her country’s coastal economy. Sen. Susan Collins, R-Maine, thanked Canada for the exemption for her state’s signature lobster and urged U.S. Trade Representative Jamieson Greer to return to the negotiating table.
What the Law Is Doing
Trump invoked Section 338 of the Tariff Act of 1930 to impose the tariffs. PBS News said the statute is obscure and rarely used, and that the president’s Section 338 tariff authority has never been used, let alone tested in court. Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, said, “This law is literally a blank canvas because it's never been litigated.” PBS said it is unclear whether the latest Canada tariffs could survive a legal challenge, and some lawyers argue the Depression-era law has been rendered obsolete by more recent trade laws.
PBS said Trump used the law to sanction Canada for allegedly discriminating against U.S. dairy, auto and alcoholic beverage exports this summer. The article said Section 338 authorizes presidential tariffs of up to 50% on imports from countries that have discriminated against U.S. businesses. It also said no president before Trump had actually used the statute. Legal scholars Peter Harrell and Jennifer Hillman of Georgetown University wrote earlier this month in Reason that few trade lawyers were aware Section 338 remained on the books until Trump’s second term. They said State Department records show the U.S. considered using Section 338 against Spain in 1932 and against newly Communist China in 1949, but never did.
Sara Albrecht, CEO of the Liberty Justice Center, said, “There is a very strong argument that (Section 338) was superseded.” She pointed to later laws, including the Trade Expansion Act of 1962 and the Trade Act of 1974. Harrell and Hillman said Section 338 only authorizes tariffs that “offset” the harm a foreign country’s trade practices do to American companies, and they said the Trump administration made no attempt to calculate the dollar amount of damage from discrimination against U.S. farmers, automakers and marketers of alcoholic beverages. They also said the U.S. went after Canadian imports unconnected to those trouble spots, including hockey sticks and cement.
The Courts and the Captive System
The AP said no one has filed a lawsuit challenging the Section 338 tariffs. The Liberty Justice Center has been looking for businesses willing to sue the government over the levies, but Albrecht said, “I haven't had a lot of response from plaintiffs.” She added, “Anytime you want to sue the government, it's a hard proposition.” That’s the machinery at work: the state sets the terms, and anyone trying to fight back has to crawl through a legal system built to make that fight expensive, slow and uncertain.
John Veroneau, former general counsel for the U.S. Trade Representative and adjunct professor at the University of Maine Law School, said the tariffs are straightforward and justified when another country discriminates against U.S. imports by taxing them more than it taxes imports from other countries. He said Canada did that when it responded to tariffs Trump imposed on Canadian products last year with its own retaliatory tariffs on U.S. imports. Veroneau said, “Courts will rightly feel obliged in the face of any challenge (to decide): Are the statutory requirements met or are they not met, however ludicrous the broader context might be.”
The AP also said the Section 338 tariffs on Canada are far smaller — just 5% of Canadian imports — than Trump’s 2025 worldwide tariffs, meaning fewer companies have to pay them and can claim injury. That detail matters. Smaller levies can mean less legal pressure, even when the damage still rolls downhill.
Trump said on social media, “we don’t expect to be doing much business with Ontario any longer,” and later wrote, “Canada has been ripping off the United States of America for years,” adding, “They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US!” Those are the words of a ruler trying to turn trade into theater, with everyone else stuck paying the bill.
The AP said the United States exported nearly $334 billion worth of products to Canada last year and Canada sent nearly $382 billion back across the border, according to the U.S. trade representative. Wisconsin Gov. Tony Evers, a Democrat, said in his weekly radio address Aug. 27 that the trade war with his state’s largest trading partner was “leaving farmers and producers here in America’s Dairyland in the lurch.” Heidi Brock, president of the American Forest & Paper Association, said escalating tariff disputes will “disrupt the cross-border supply chains that help mills and manufacturers invest, compete and deliver essential products people depend on every day.” She added, “New counter-tariffs on U.S. goods, including pulp and paper products, risk adding uncertainty and cost for manufacturers, workers, customers and communities on both sides of the border.”
Procter & Gamble’s chief financial officer, Andre Schulten, told investment analysts April 24 that the outlook for 2026 was for higher costs from tariffs of about $500 million before tax and that the company expected $150 million in refunds from the emergency tariffs that were overturned. Whirlpool CEO Marc Bitzer said Aug. 4, “We have a real cost, and we pass it on to the market,” and added, “Keep also in mind that the cost for tariff for us are lower on a relative basis than for our competitors. So put it differently, our competitors will feel the impact of tariffs significantly more than we do.”
Chris Swonger, CEO of the Distilled Spirits Council of the United States, said what had been a $200-million-a-year market for U.S. alcohol sales in Canada has shrunk to $60 million. He said, “This discriminatory treatment of U.S. spirits products has persisted for more than a year and a half, causing significant economic harm to our industry.” He also said, “A 50% tariff is going to be devastating on the Canadian distilled spirits industry.” The numbers keep climbing. The pain does too.