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Trump’s New Tariffs Are Designed to Tear Canada Apart

Washington can now reward some provinces and punish others. The political danger may be considerable

On July 20, the American administration signed three proclamations invoking Section 338 of the Tariff Act of 1930—the Smoot–Hawley Act that helped intensify the Great Depression. The move imposed 50 percent tariffs on a wide range of Canadian goods, from wine to hockey sticks to cement.

The proclamations cite three grievances: Canadian treatment of United States autos, alcohol, and dairy. The tariffs take effect August 19. They apply even to goods that qualify as duty free under the Canada–United States–Mexico Agreement, though energy, potash, fish, and critical minerals are exempt. It is the first actual use of Section 338. The last time it was even discussed was 1949.

The damage from Section 338 tariffs goes beyond economic harm. These new tariffs, uniquely, allow a president to target individual provinces rather than the entire country. This presents a new set of complications in the ongoing bilateral and trilateral negotiations with the US. To be sure, Americans have already been able to exert a de facto provincial tariff policy through existing tariffs. Not every province exports autos or aluminum or copper, for example. But by targeting these specific products, the administration is, in effect, targeting these provinces.

Section 338 goes much further. It allows the administration to discriminate between provinces producing the same goods—for example, letting wine from British Columbia and Nova Scotia enter the United States duty-free while imposing a 50 percent tariff on wine from Quebec.

Given the current regional tensions, the already widely divergent provincial impact of US tariffs (from severe harm to almost no harm), and the outsized role provinces play on trade policy and negotiations, Donald Trump now has a powerful new tool for exploiting Canada’s internal divisions.

The “naming and shaming” has already begun. This week’s proclamation on alcoholic beverages singles out Alberta and Saskatchewan as the only provinces to have lifted their bans on US alcohol, in contrast to every other province and territory.

An obvious next step would be a carve-out: beer from Alberta and Saskatchewan would be welcome........

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