50% tariffs imposed on Canadian goods, imports

As a result of renewed talks on Monday regarding the United States-Mexico-Canada Agreement (USMCA), President Donald Trump has imposed 50% tariffs on most Canadian goods, including vehicles, according to multiple national news media organizations.

The U.S. didn’t renew the USMCA in its previous form at the agreement’s mandatory six-year joint review on July 1.

Negotiations are also underway between the U.S. and Mexico. The Section 122 import surcharge is set to expire on July 24.

The tariff decisions impact imported auto parts.

Automotive News reports that Canada’s countertariffs “chewed a US $5.6 billion (Cdn $7.9 billion) hole in American auto exports to Canada between April 2025 and March 2026,” data it attributed to the White House, “representing a 22% decline from a year earlier.”

“Canadian vehicle imports from Mexico, Japan, South Korea, and Germany, meanwhile, increased by US $2.9 billion (Cdn $4.1 billion) over the same period,” the article states.

JD Supra reported ahead of the July 20 White House announcement that the automotive sector has been a “key target” of the Trump administration’s trade policy.

“As a result of Section 232 duties, United States-Mexico-Canada Agreement (USMCA) renegotiation, and antidumping/countervailing duty investigations (AD/CVD), original equipment manufacturers (OEMs) and automotive suppliers have been forced to navigate substantial uncertainty in the market,” the article states. “All parties along the supply chain must closely monitor developments to ensure compliance and take advantage of potential duty savings.”

Section 232 duties are the baseline tariff framework impacting completed vehicles, medium- and heavy-duty vehicles, and their parts, according to the article.

“Finished vehicles and certain parts enumerated by HTS code, along with parts that importers certify are used for production or repair activities, are generally subject to the duties,” JD Supra reports. “This framework was introduced by Proclamation 10908 of March 26, 2025, as amended (the “Autos Proclamation”), for automobiles and parts, and Proclamation 10984 of October 17, 2025, as amended (the “Trucks Proclamation”), for medium- and heavy-duty vehicles and parts.”

The Associated Press notes that the new tariffs exclude energy products, potash, fish, and critical minerals, and do include goods previously protected from USMCA import taxes.

”That 2020 trade pact was not renewed by the U.S., triggering a new set of negotiations that could run until 2036,” the article states.

The new tariffs are set to take effect 30 days from Trump’s July 20 proclamation, which falls on Aug. 19.

“…meaning there is time for negotiations as Trump has not always followed through on his announced tax hikes on imports,” the AP reports.

According to a White House fact sheet on the new tariffs, Canada applies a 25% tariff rate on all goods not originating in Canada or Mexico that are used to produce U.S. motor vehicles that qualify for preferential, duty-free treatment under the USMCA, which is capped at 85% of the total value of the vehicle.

“Canada, through discrimination against or an unreasonable and unequal imposition on U.S. auto and auto parts exports, burdens U.S. commerce but not the commerce of other countries and disadvantages U.S. commerce compared to the commerce of other countries,” the fact sheet states. “Specifically, Canada imposed a tariff system on only U.S. motor vehicles and treats the commerce of foreign countries more favorably than commerce of the United States with respect to motor vehicles, as defined in Canada’s United States Surtax Order (Motor Vehicles 2025), SOR/2025-118.

“By denying to the commerce of the United States the benefits afforded to like commerce from other countries, Canada discriminates against U.S. commerce, disadvantaging the commerce of the United States compared to the commerce of other countries. And Canada’s imposition on U.S. motor vehicles is unreasonable, is not equally applied upon the like articles of every foreign country, and places a burden on the commerce of the United States but not on the commerce of other countries.”

In response, the AP reports that Canadian Prime Minister Mark Carney said, “This trade dispute has raised costs for families, particularly in the U.S. Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens.”

Fox News reports Trump’s newly imposed tariffs as “a little-known provision” of the 1930 Tariff Act.

“Known as Section 338, the nearly century-old law gives the president broad authority to impose duties on imports from countries deemed to discriminate against U.S. commerce,” the article states. “Its first-ever use by a U.S. president could establish a new legal blueprint for future trade disputes.

“The law has taken on added significance since the Supreme Court ruled against the administration’s use of emergency powers for Trump’s “Liberation Day” tariffs, prompting new interest in alternative legal authorities.”

USA Today adds that Trump’s decision “risks further escalating a trade war” between Canada and the United States “after Trump threatened tariffs against the country in response to smoke that entered the United States from raging wildfires in Canada.”

”An administration official said Trump is exploring other unspecified tariff options for the wildfire response, however,” the article states.

USA Today reports the tariffs “apply to a range of Canadian imports from wine and dairy to hockey sticks and cement,” according to an official the news outlet spoke to.

Excluding energy, potash, fish, and critical minerals, among other exemptions, “all other Canadian exports, including those singled out as tariff-free in the United States-Canada-Mexico agreement signed in 2019, are subject to the tariff.”

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