U.S. President Donald Trump is imposing 50 percent tariffs on a range of Canadian goods. The measure marks a significant escalation of the trade conflict between two of the world’s most economically interconnected neighbors.

The new tariffs will take effect in 30 days and impact Canadian goods valued at nearly 20 billion dollars, equivalent to about 190 billion Swedish kronor. Among the affected products are electrical equipment, machinery, furniture, clothing, alcohol, dairy products, and sporting goods, Reuters reports.

The 50 percent tariff rate is one of the highest the Trump administration has imposed against any single country. At the same time, only about five percent of Canada’s total exports to the U.S. are expected to be affected, corresponding to about 0.6 percent of the U.S.’s total imports.

Accuses Canada of Discrimination

The Trump administration justifies the decision by accusing Canada of discriminating against American products, including cars, alcohol, and dairy goods. Several Canadian provinces have restricted or banned the sale of U.S. alcohol, while Canada has also imposed countermeasures on American cars.

However, many of the Canadian measures have largely been implemented in response to earlier U.S. tariffs. The White House points out that Canada, along with China, is among the countries that have chosen to retaliate with their own tariffs instead of negotiating on U.S. terms.

Trump has also recently threatened Canada with trade measures due to smoke from extensive Canadian wildfires that has drifted over northern U.S. According to the administration, however, the new tariffs are not connected to the wildfire smoke.

Canada’s Prime Minister Mark Carney responded that the country still believes in “free and fair trade,” but that the government is prepared to take whatever measures are necessary to protect Canadian workers, farmers, businesses, and families.

Ontario Premier Doug Ford went further, calling for immediate countermeasures.

– If these tariffs are implemented, Canada should respond tariff for tariff, dollar for dollar, Ford wrote on X, according to AP.

Revives Law from 1930

To impose the tariffs, Trump is invoking a nearly century-old provision: Section 338 of the U.S. Tariff Act of 1930. The provision gives the president the right to impose tariffs of up to 50 percent against countries deemed to discriminate against American goods or companies.

The provision has never before been used in the manner Trump now intends. It has primarily served as a threat and bargaining chip in trade disputes since its introduction during the protectionist period following the 1929 stock market crash.

Already in 2025, Reuters reported that the Trump administration was considering reviving the provision. Legal experts at the time warned that such use could undermine the international trade system built since World War II.

This new legal avenue has become important for Trump since the U.S. Supreme Court ruled in February that the president could not use the country’s economic emergency laws, the IEEPA, to impose sweeping tariffs against virtually the entire world.

After the court ruling, the Trump administration was forced to seek support in other laws. AP has described Section 338 as one of the most far-reaching alternative tools, as it does not require extensive federal investigation before tariffs are imposed.

Free Trade Agreement Offers No Protection

Unlike several previous American tariffs on Canada, there is to be no blanket exemption for goods covered by the North American free trade agreement, USMCA.

USMCA is the trade agreement between the U.S., Canada, and Mexico that replaced the earlier NAFTA agreement during Trump’s first term. It has allowed a large share of trade between the three countries to take place tariff-free.

The agreement is now in a period of renegotiation and review. The U.S. has chosen not to automatically extend it, which has set in motion a process that could ultimately lead to the agreement ending in 2036 if the countries do not reach a new deal, according to Reuters.

Certain strategically important Canadian goods are, however, exempt from the new tariffs. These include energy products, critical minerals, fish, and products already subject to specific sector tariffs, such as cars and metals.

Could Give Trump a New Tool

Even though the direct economic impact is limited, the decision could have major principled significance. If U.S. courts approve the use of Section 338, Trump could gain a powerful new tool in future trade negotiations.

Tariffs have become one of Trump’s primary economic and foreign policy levers. The U.S. has already imposed or threatened higher tariffs against, among others, China, Mexico, Brazil, and the EU.

There is a simultaneous risk that Canada will respond with equivalent tariffs, potentially starting a new spiral of tariffs and counter-tariffs. Given that trade between the U.S. and Canada covers everything from energy and vehicles to food and industrial components, the conflict could also affect international supply chains and European companies.

For Swedish consumers and businesses, the development is therefore relevant even though the conflict is taking place across the Atlantic. A major North American trade war could affect commodity prices, exchange rates, industrial production, and demand for European export goods.