Expanded trade tension sees Canada bracing for 35% tariff, under Trump's continued pressure on trade relations
In a move that could escalate trade tensions, President Trump has implemented a new tariff expansion targeting Canadian goods not covered under the US-Mexico-Canada Agreement (USMCA). The tariff rate for these goods has been increased from 25% to 35%, marking a significant shift in trade relations.
The legal basis for these tariffs primarily stems from investigations and actions under Section 232 of the Trade Expansion Act of 1962. This statute allows the President to impose tariffs or other trade restrictions on imports that threaten national security. The order also imposes a 40% duty on goods rerouted through third countries to avoid tariffs.
Canada's Prime Minister Mark Carney was not engaged before the implementation of this new tariff. The administration's justification for the increased tariff is based on Canada's "ongoing inaction and retaliation."
The International Emergency Economic Powers Act is being used to support the new tariffs, marking a bold legal move. However, the legality of these tariffs is drawing scrutiny, with some lawsuits already filed in federal courts.
Mexico, too, has been affected by the tariff expansion. They received a temporary break from a proposed 30 percent hike on non-USMCA goods, but their 50 percent steel and aluminum tariffs and 25 percent auto duties remain fully in place.
The tariff expansion is part of a broader strategy that may complicate negotiations not just with Canada, but with other countries as well. The administration is focusing heavily on trade deficits and industrial leverage, positioning tariffs as bargaining chips to reverse trade imbalances and revive U.S. manufacturing.
The new tariff rate took effect immediately at 00:01 Eastern Time on August 1. While formal legal challenges are common in such contexts, no specific ongoing suits were identified in the provided data.
The order aims to cut off tariff evasion and signals deeper enforcement mechanisms may follow. A grace period is applied, allowing goods loaded by August 7 or arriving by October 5 to escape the higher rate.
The markets showed only a mild reaction in the five hours following the tariff announcement. Asian equity futures slipped, but not dramatically, suggesting some normalization around Trump's tariff threats. Volatility could increase as more details emerge, particularly around "rules of origin" for Canadian products.
The new tariff expansion targets 69 countries, all facing stiff penalties unless new trade terms are reached. The Trump administration sees August 12 as a possible deadline for a new trade deal with China. The extension for Mexico likely hinges on their willingness to renegotiate broader trade terms.
The tariff expansion could have far-reaching implications, potentially complicating trade relations with multiple countries and increasing global economic uncertainty. As the situation develops, it will be crucial to monitor the progress of any legal challenges and the response from the affected countries.
- The implementation of the tariff expansion on Canadian goods, increasing from 25% to 35%, has stirred up discussions in the realm of policy-and-legislation and politics, as it could escalate war-and-conflicts among nations.
- The tariff expansion, supported by the International Emergency Economic Powers Act, has drawn scrutiny in courts, with lawsuits already filed questioning its legality, leading to debates in the crypto, defi, and general-news spheres.
- As the tariff expansion, affecting 69 countries, could have far-reaching implications, impeding trade relations, and increasing global economic uncertainty, it is vital to keep track of the progress of any legal challenges and the response from the affected countries, particularly in the context of ongoing negotiations and legislation.
