Wisconsin cheese, Maine seafood, Kentucky appliances: Trump’s Canada tariffs punch swing states just before the midterms

The United States and Canada, historically close allies, are moving further into a full-blown trade war with no end in sight.

On Aug. 25, 2026, Canada imposed tariffs of up to 50% on hundreds of U.S. goods after the U.S. placed similar, long-threatened levies on Canadian products. It followed the collapse of trade talks that had been inching towards a deal.

The next day, U.S. President Donald Trump called Canada “one of the worst countries in the world to deal with.” Canadian Prime Minister Mark Carney claimed Trump was trying to “destroy” his country’s auto industry. Only a few days earlier a deal was reportedly very close.

One of the most notable aspects of the collapse in trade negotiations lies in Trump’s unprecedented use of an untested tool in the Tariff Act of 1930, otherwise known as the Smoot-Hawley tariffs. Economists generally agree that the act’s escalating retaliatory tariffs extended the Great Depression by sparking a global trade war. Amplified by foreign retaliation and falling global gross domestic product, U.S. trade fell by two-thirds from 1929-1932.

Smoot-Hawley contains a provision known as Section 338, which provides an additional feature: The president may, on his own authority, impose unilateral tariffs of 50% if a foreign country’s policies “discriminated” against the United States.

But the section was never invoked, as the damage from the other Smoot-Hawley tariffs was already done. That is, until July 2026, when Trump first threatened the 50% tariffs on Canada for its “discriminatory treatment” of U.S. products.

As an economist who has studied trade policy for 49 years, I can explain how the two countries got embroiled in a trade war and what it means for U.S. consumers, companies and the midterms.

Why did the trade deal collapse?

Both sides are finger-pointing at the other over what caused the proposed deal to fall apart during the final days of the trade negotiations.

The Canadians were interested primarily in reducing........

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