That tariff could land as soon as next month.
The announcement came after the USMCA trade agreement expired on July 1. U.S. officials refused to renew the pact, claiming that Canadian policies create unfavorable conditions for American liquor, cars, and dairy items. The new 50% tariff would not have any exemption under the old pact, which makes this a direct escalation.
Carney said after the call that they agreed to "intensify negotiations in the coming weeks." He added that his team is ready to get to work. If no deal is reached, the tariffs hit in August.
These new levies add to the strain caused by the expired USMCA and escalate the ongoing trade dispute. Ontario Premier Doug Ford has already responded by ordering U.S. alcohol removed from store shelves. This week, Canada's provincial leaders are meeting in Prince Edward Island, with Carney scheduled to address them later on July 21.
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The USMCA was originally negotiated in 2018 to replace NAFTA, and its renewal became a major point of contention. At the heart of the dispute is Canada's supply-management system for dairy, which Washington argues unfairly restricts American access. This proposed 50% levy covers roughly 5 percent of Canadian goods shipped to the United States, a significant escalation beyond previous trade actions.
Trump's administration has long criticized Canada's protective measures for its dairy sector and other industries. The new tariff - set at 50 percent on roughly one-twentieth of Canadian exports to the US - further strains relations across the border.
Carney made it clear that Canada is not just waiting to see what happens. He stated, "We will look at all options in terms of how we would respond if they do come into effect." He also noted that decisions about pulling U.S. alcohol from shelves should be made by individual provinces, and only as part of a broader agreement.
For his part, Trump struck a mixed tone. He said, "I love Canada. I love the people of Canada," but also claimed the country could not survive without the U.S.
The current confrontation has roots in longstanding U.S. frustration with Canada's dairy supply-management system, which limits imports through quotas and high tariffs. The USMCA, signed in 2018, gave American farmers slightly more access to the Canadian dairy market, but Washington argues that Ottawa has not fully complied. Trump's administration also objects to Canadian policies on digital services taxes and automotive content rules.
The expired agreement had originally been set for review in 2026, but the U.S. push for renegotiation came early, leading to the July 1 expiration without renewal. Canada exported roughly $340 billion in goods to the United States last year, making the U.S. its largest trading partner by far. A 50% tariff on even a small slice of that trade could disrupt supply chains and raise costs for businesses on both sides of the border.
Provincial premiers, led by Ontario's Doug Ford, took retaliatory measures last year, with Ford ordering the removal of U.S. alcohol from government-run liquor stores. Further coordinated action is expected after this week's meeting in Prince Edward Island.
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