Tariffs Will Cover a Limited Product List
Canada is preparing for the possible introduction of new US tariffs after no agreement or postponement had been officially announced as of August 18.
According to Reuters, the 50% rate is scheduled to take effect on August 19. It will not apply to all Canadian exports but will cover goods worth nearly $20 billion. That represents approximately 5.2% of the $383 billion in goods the United States imported from Canada in 2025.
The affected categories include wine, furniture, dairy products, cement, clothing, fishing rods, hockey equipment and several other products.
Washington Uses a Rarely Invoked Trade Provision
The United States invoked Section 338 of the Tariff Act of 1930. The provision allows Washington to impose additional duties of up to 50% on countries considered to be discriminating against US goods.
A significant feature of the planned measure is that it can apply even to products that comply with the rules of origin under the United States–Mexico–Canada Agreement, or USMCA. Compliance with the agreement had previously protected a large share of Canadian shipments from additional US tariffs.
Manufacturers and importers will therefore need to verify both the origin of their goods and whether individual products are included in the new tariff schedule.
Automotive Trade Remains the Main Sticking Point
Canada and the United States continue to hold consultations, but the negotiations have yet to produce a draft agreement. The Canadian government said that Ottawa’s priorities include addressing existing sectoral tariffs and preventing duties under Section 338.
Automotive trade is among the most difficult unresolved issues. According to Reuters, negotiators have discussed reducing the current US tariff on Canadian vehicles from 25% to 15%.
The two sides disagree over how the value of vehicle components should be treated. Washington wants deductions limited to US-made content, while Ottawa is seeking recognition of all North American content, including components produced in Canada and Mexico. The Canadian proposal could substantially reduce the effective tariff on vehicles assembled through integrated regional supply chains.
Other unresolved matters include Canada’s dairy market regulations, Ottawa’s retaliatory duties on US vehicles and steel, and restrictions on the sale of American alcohol in some Canadian provinces.
Logistics Companies Face Higher Costs and Uncertainty
Even a limited product list could disrupt substantial road and rail freight flows across the border. A 50% duty would sharply raise landed costs and could prompt importers to postpone shipments, reduce orders or seek alternative suppliers.
Carriers, freight forwarders and customs brokers will need to scrutinise tariff classifications, origin documentation and entry dates. Businesses may also have to revise contracts and determine whether suppliers or buyers will bear the additional customs costs.
Small and medium-sized companies are particularly exposed because they often have limited inventories and less working capital. Manufacturers relying on just-in-time cross-border deliveries may respond by holding more stock, increasing demand for warehousing and raising supply-chain costs.
A last-minute agreement remains possible before August 19. Logistics operators should nevertheless prepare for both outcomes: the tariffs taking effect as scheduled or their terms changing as a result of continuing negotiations.
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