President Donald Trump has escalated trade tensions with Canada by imposing 50% tariffs on nearly $20 billion worth of Canadian imports, invoking a rarely-used law from the Great Depression era. The move targets a wide range of products including wine, cement, dairy, furniture, and ice hockey gear, and marks the first known use of Section 338 of the Tariff Act of 1930 in nearly a century. Main Developments The tariffs, set to take effect in 30 days on August 19, apply to roughly 5.2% of the $382 billion in goods the United States imported from Canada in 2025, according to US Census Bureau data. The US Trade Representative’s office confirmed the tariffs would cover nearly $20 billion of Canadian imports. US Trade Representative Jamieson Greer stated that Canada has continued to retaliate against US efforts to rebalance trade and protect national-security sensitive sectors, unlike other trading partners. The proclamation exempts key goods such as energy, potash, fish, critical minerals, and products already covered by Section 232 tariffs. Read also: Why Pakistan is handing diesel imports to a single state firm Canadian Prime Minister Mark Carney responded by saying his government has made comprehensive proposals to resolve disputes and that Trump’s past tariffs violated the North American trade pact. “This trade dispute has raised costs for families, particularly in the US,” Carney said, adding that Canada stands ready for intensive negotiations. Background Section 338 of the Tariff Act of 1930 was designed to ensure countries apply tariffs equally and avoid giving preferential rates to some nations at the expense of US exports, according to John Veroneau, a former US trade official in the George W. Bush administration. He noted that presidents including Franklin D. Roosevelt considered using it, but no record exists of any president actually imposing tariffs under Section 338 until Trump’s proclamations. The Tariff Act of 1930 is historically associated with massive US tariff increases and retaliation that economic historians say worsened the Great Depression. After World War II, major countries established the “most-favored-nation” system through the General Agreement on Tariffs and Trade to prevent a return to pre-war “beggar-thy-neighbor” policies. The White House cited Canada’s “protectionist” dairy supply management system, as well as tariffs and quotas on US cars imported into Canada, as grounds for the new levies. Most Canadian provinces have halted the sale of US alcohol in response to prior US tariffs, and the White House noted that Canadian imports of US motor vehicles dropped by 22% and US alcoholic beverages by 81% over the past year. Why It Matters The tariffs threaten to open a new front in a global trade war, with Canada being a key US ally and trading partner. Veroneau called the use of Section 338 “ironic,” saying it violates the spirit of a law intended to create a world where countries apply the same tariffs on the same goods to all countries. He added that Trump has moved away from this principle “in a maximalist way.” Diamond Isinger, a former senior adviser to ex-Prime Minister Justin Trudeau on US-Canada relations, said Carney would have limited ability to compel provinces to resume selling American alcohol, as provincial premiers have the authority to decide whether to restock. The tariffs also raise costs for US families, as Carney noted, and could further strain diplomatic relations. What's Next The tariffs take effect on August 19, unless negotiations alter the timeline. Greer has pointedly left Canada out of ongoing talks with Mexico on changes to the US-Mexico-Canada Agreement, and he holds bilateral talks in Mexico City this week. Trump and Carney met at the FIFA World Cup Final on Sunday, where Trump demanded action on wildfires sending smoke across the US, threatening to add the “incalculable cost” of pollution to existing tariffs. Carney said Canada is ready for intensive engagement to address outstanding issues.