SerpApi.Org
As Prime Minister Mark Carney warns of rising consumer costs on both sides of the border, Canadian leaders signal an aggressive standoff over Section 338 import taxes.
Yesterday, U.S. President Donald Trump announced a new plan to impose a 50 percent tariff on Canadian goods like alcohol and dairy. Naturally, the fallout across the border has been swift.
Already, Canadian Prime Minister Mark Carney blasted the decision, calling it the latest in a series of tariffs in direct violation of the trade agreement between the U.S., Mexico, and Canada (USMCA).
“This trade dispute has raised costs for families, particularly in the U.S.,” Carney said in a post on X. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens.”
A statement the White House released yesterday said the move is “in response to Canada’s discriminatory treatment of American products,” adding that “President Trump is offsetting the burden and disadvantage on U.S. commerce from Canada’s discriminatory treatment of U.S. commerce and is leveling the playing field for crucial American exports—cars, alcohol, and dairy.”
The statement claims that Canada imposes certain tariffs on U.S. imports but not on other imports from other countries. The measures are brought under Section 338 of the Tariff Act of 1930 and are set to go into effect 30 days after signing—this provision has never been invoked before.
The tariffs specifically target alcohol imports. The statement claims that “all but two Canadian provinces and territories have halted the purchase, distribution, or retailing of U.S. alcoholic beverages, and have not imposed similar restrictions on other countries.” It cites data that from March 2025 to February 2026, Canadian imports of U.S. alcoholic beverages decreased by around 81 percent, or $582 million, in comparison to the same period in 2024 to 2025.
Alfredo Carrillo Obregon, a policy analyst at the Center for Trade Policy Studies at the Cato Institute, told Inc. that if the aim of the tariffs is to cause significant economic pain, then they are unlikely to be effective. The goods targeted account for only five percent of total Canadian imports to the U.S..
However, if the aim is to target particular sectors of political significance, then they are much more likely to be effective as a retaliatory action against Canada. “My read is that the administration is more likely aiming for the latter and trying to create additional leverage vis-á-vis Canada with respect to issues that are going to be on the table as part of the negotiations to extend the US-Mexico-Canada Agreement (USMCA),” he said.
Canada’s overwhelmingly negative response
Trade tensions between the two countries have escalated over the past 18 months. Ontario and Quebec started pulling U.S. alcohol from their shelves in early 2025 in response to U.S. tariffs on Canadian goods, Just Drinks reported.
Alberta and Saskatchewan instituted a short-lived ban on the products. Sales remain restricted in other parts of the country.
Ontario Premier Doug Ford posted on social media that “if these tariffs proceed, Canada should respond tariff for tariff, dollar for dollar.”
How it will impact North American consumers
Alcoholic goods impacted by the new tariff will include whiskey, brandy, wines, beer, and cider.
Chris Swonger, the CEO of the Distilled Spirits Council of the United States (DISCUS), told Just Drinks: “For nearly a year and a half, American spirits have been pulled from store shelves across much of Canada as collateral damage in a broader trade dispute unrelated to our sector, and we appreciate the Administration’s recognition of the significant damage these restrictions have caused US distillers.”
The dairy products facing the tariff include milk and cream in various physical forms as well as dried whey and whey protein concentrates. Trump has previously criticised Canada’s tariff-rate quota that the country implements on cheese, which it does under the USMCA and in its trade deal with the European Union.
The impact of tariffs on consumer’s wallets is never straightforward, since tariffs are paid for by importers, not directly by shoppers. Still, economists have said that these costs can be passed through the supply chain and eventually impact distributors, retailers, and customers.
Carrillo Obregon told Inc. that past research has shown that even though Americans pay the majority of tariffs, businesses continue to absorb large shares of related price increases. These businesses then tend to pass along the costs to consumers in a gradual process.
USTR and DISCUS did not immediately respond to Inc.’s request for comment.
This post originally appeared at inc.com.
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