On August 22, 2026, the United States announced that new tariffs would be assessed on a number of Canadian products.
Press reports immediately announced the big numbers – 50% tariffs on approximately $20 billion in imports. Most press reports leave out the other details – the actual reasons for the action, and the fact that this only applies to about 5% of American imports from Canada, not to everything we import.
So let’s look into a bit more detail.
The Purpose of International Trade
Why do we import? Why do we export? What’s the purpose?
The easy economic answer is to say that we export in order to give a broader customer base to our manufacturers, and we import in order to give a broader selection to our consumers. If we keep the two in balance, we benefit from a growing economy and greater general prosperity across the board. It’s true, as far as it goes, but it can’t be viewed in a vacuum.
A more philosophical answer is to say that we import and export for world peace. There has long been a theory that trading partners don’t get into shooting wars with each other. It’s a nice idea, but it hasn’t been proven by experience. We didn’t trade with the USSR during the Cold War, and we never fought them directly in all that time, not because of trade or any lack thereof, but because we had hundreds of intercontinental ballistic missiles pointed at each other. And yet, everybody gets into shooting wars with their trading partners all the time. It doesn’t seem to dissuade anything; it just causes trouble for dependent companies when hostilities finally, unavoidably, commence.
Ultimately, we import and export because we have domestic commerce, and with 200 countries in the world, we can’t seem to imagine being completely self-sufficient and self-contained, so we want to import and export too. We don’t just want to buy and sell domestically; we want more options.
So government’s job is to find a way to accommodate that desire, to build trade agreements that set tariffs and regulations, demanding currency stability and intellectual property protections, and a host of other details from bans on slave labor to environmental protections.
As international trade has grown in volume and value, it has also had an immense effect on our way of life, both growing some industries and destroying others, both enriching some investors and destroying others.
We once had a robust furniture industry, a great textile industry, a fantastic automotive industry, until global competition demolished these once-dominant sectors. Some of that was the fault of the companies, the unions, the local governments, and bad luck. But much of it was also the fault of national trade policy that didn’t properly adjust trade regulations to keep up with the reality on the ground. As a result, China has benefited, as not just the USA, but Canada, Mexico, Europe, Great Britain, and many other trading partners have all suffered.
These governments either didn’t notice or didn’t care, and simply didn’t act, for decades. The Trump administration is trying to undo generations of damage overnight. This makes it painful, but it’s an intention worth respecting.
The Challenge with Canada
Canada is a special case. With most trading partners – South Korea, the Philippines, Chile, Australia – we have an ocean between us, and their trade impact is relatively mild in the big picture. But Canada has long been one of our biggest trading partners, as we have been theirs. Despite our close relationships with many other countries, our relationship with Canada has been outsized, thanks to our enormous shared border, our common language, and the natural convenience of doing business with each other.
It is therefore both especially destructive, and especially saddening, when we recognize a problem and try to rectify it, and see our neighbor and friend to the north not just continuing to live in denial, but doubling down on the error.
When President Trump took office the first time, he recognized the growing dependence on China of not just the USA, but our friends like Canada as well. The first Trump administration took the heroic step of challenging China, and took the slings and arrows that resulted from it – only to see that, instead of joining the fight for the good of our respective citizenries, Canada’s government continued to increase its dependence on China under PM Trudeau, and now under PM Carney.
It’s instructive to note that even the USA’s leftist Biden-Harris regime didn’t waive any of President Trump’s actions against China; for four years they quietly recognized the value and left it all in place. By contrast, Canada’s leftist government has doubled down on importing from China, even as its own manufacturing sector has become a shell of its former self. Outside of Alberta’s booming energy sector, Canada is rapidly becoming a welfare state. And Prime Minister Carney is apparently just fine with that.
The United States – Mexico – Canada Agreement (USMCA), the successor to NAFTA, is designed to reward manufacturers who primarily source their materials and labor within North America, as opposed to manufacturers who largely just do final assembly on imported goods. Canada’s pro-China policies have supported the hollowing-out of Canadian manufacturing for years, defeating the very purpose of the USMCA.
This has put the Trump administration in a difficult position, as it tries to support the purpose of the USMCA while also reducing the tariff pain on our importers, but negotiators finally decided there was no choice left to them this time, and they have gone forward with this new set of retaliatory tariffs, always with the understanding that they’ll be happy to drop them – and others – when Canada’s government is willing to act in the best interests of its own people as well as ours.
Canada really just needs to stand up to China, the way that the USA does, and the way that more and more countries, following our lead, are finally doing.
The New Tariffs
The Trump Administration conducted a review this spring, in which they determined that Canada – both nationally and at the provincial level – has committed a number of specific discriminatory affronts against certain American industries.
Under Section 338 of the Tariff Act of 1930, the US is implementing these new 50% tariffs (such as a jump from 25% to 50% on automobiles) on a host of commodities, ranging from auto parts to sporting goods, from dairy products to wine, from cement to clothing.
While the 50% rate grabs our attention, it is important to note that it only affects about 5% of the goods that the United States imports from Canada – approximately $20 billion of the $400 billion per year we import from our northern neighbor, by goods value.
And what were the affronts that caused this? Well, over the past year and a half, Canada has engaged in discriminatory practices against the USA in several specific ways. All but two Canadian provinces have instituted official boycotts against American liquor (causing our northward alcohol exports to plummet by over half a billion dollars per year). And the national government in Ottawa has implemented specific discriminatory rules on automotive manufacturing that they don’t impose on any other country, resulting in a $5.6 billion/year drop in purchases of American vehicles. Finally, Canada has been unrelenting in its punitive dairy quotas, which freeze Americans out of their market for many classes of cheese and other dairy products.
On top of these specific discriminatory practices, the Canadian government has also internally endorsed the practice of illegal transshipment – that is, the use of Canada as a middleman to route Chinese steel to the U.S. market, deceptively described in order to bypass the USA’s anti-China tariffs. This is trade fraud, on a grand scale, as it’s not just individual companies doing it, but the Canadian government itself encouraging it. We cannot let this stand.
As far as the Trump administration can tell – and who can know for sure, but this is the perception – it appears that the current Canadian government is intentionally doing passive-aggressive attacks on the United States market, again and again, especially when the United States are trying to help wean our entire hemisphere off this suicidal dependence on China.
Again and again, Canada’s Liberal party sets policies that are more to the advantage of China than of Canada or Canada’s allies. Why? Hard to say. Perhaps ideology, perhaps spite, perhaps naivete?
All we can be sure of is that Canada’s new leader is more of a globalist even than his formidable “central banker” background would have indicated.
When the Americans made the final announcement that the USA found it necessary to go ahead with this new set of tariffs, Mr. Carney didn’t sound apologetic or frustrated. He just happily reassured his countrymen that there would be no reason to worry, because he would just make it up in subsidies.
Yes, the prime minister of an essentially bankrupt country promised to subsidize the businesses injured by his policies.
Which leaves the objective outsider scratching his head and asking one question:
With What Money?
Copyright 2026 John F. Di Leo
John F. Di Leo is a Chicagoland-based international transportation and trade compliance trainer, speaker, and consultant. His book on vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris administration (Evening Soup with Basement Joe, Volumes I, II, and III), his first nonfiction book, “Current Events and the Issues of Our Age,” and his brand new collection of stories about the heroes of the American Founding, “The Founding Generation: The Patriots Who Built America,” are all available in either eBook or paperback, only on Amazon. His trade compliance training practice is available either in person or by webinar.
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