The United States Imposes 50% Retaliatory Tariffs Against a Broad Range of Canadian Goods
On July 20, 2026, the United States announced that they will impose 50% tariffs on a broad range of Canadian goods under section 338 of the Tariff Act of 1930 (the Act), effective August 19, 2026. Canadian producers and exporters of specific goods should note that CUSMA originating goods are not exempt. This means that goods that would normally qualify for CUSMA preferential treatment will be subject to the section 338 tariffs.
Pursuant to the Act, President Trump signed three proclamations, each of which outlines a broad range of Canadian goods that will be impacted by the 50% tariffs:
Proclamation 1: Alcoholic Beverages
Goods targeted under this proclamation include beer made from malt, wine, vermouth, undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol, essential oils, certain articles of wood, and more.
Goods targeted under this proclamation include milk and cream (concentrated or containing added sugar or other sweetening matter), whey (whether or not concentrated or containing added sugar or other sweetening matter), bones and horn-cores, hop cones, sugars (such as lactose, maltose, glucose and fructose), and more.
Proclamation 3: Motor Vehicles
Goods targeted under this proclamation include food products (such as natural honey), animal products, certain live trees and other plants, certain organic chemicals, wood products, consumer goods such as toys, articles of jewellery, sporting goods, articles of clothing, furniture, and more.
Given the broad range of goods covered by the proclamations, Canadian producers and exporters are encouraged to review their exposure to the tariffs before August 19, 2026. More specifically, Canadian businesses should understand whether or not their goods are impacted. Further, Canadian businesses should monitor whether or not there will be counter measures made by the Government of Canada and whether or not there will be any changes to the US proclamations.
Immediately, we encourage Canadian businesses to review and consider applying for the Government of Canada’s Regional Tariff Response Initiative in southern Ontario. This initiative is available to Canadian businesses located and operating in southern Ontario to help respond to global trade pressures.
Please reach out to our team with specific questions relating to your business.
Contact Information:
Canada Introduces New Legislation to Strengthen the Ban on Importing Goods Made with Forced Labour
On June 2, 2026, the United States Trade Representative (“USTR”) made findings under Section 301 of the Trade Act of 1974 that 60 countries failed to “impose and effectively enforce a prohibition on the importation of goods produced with forced labour”. The United States found that this failure is “unreasonable or discriminatory and burdens or restricts U.S. commerce”, and have proposed actions to be taken against these countries.
With respect to Canada specifically, although Canada’s Customs Tariff already prohibits the importation of goods that are “mined, manufactured or produced wholly or in part by forced labour”, the USTR determined that Canada failed to “effectively enforce its forced labour import prohibition.” Further, the USTR found that Canada “has not taken action to restrict the importation of goods for which there is a known risk of forced labour.” In light of these findings, the USTR proposed additional duties of 10% on goods from Canada. The proposed additional duties will not apply to products that are compliant with the United States-Mexico-Canada trade agreement.
In response, Canada is introducing a new legislation (Bill C-35) that will implement safeguards to stop the importing of goods made with coerced labour into Canada. As stated in the announcement made by the government of Canada, the new legislation will:
Authorize the Minister of Foreign Affairs to establish a list of high-risk goods—identified by region, entity, or individual—where there are reasonable grounds to suspect they are produced by forced labour;
Establish requirements for importers of certain high-risk goods to provide enhanced supply chain tracing information to the CBSA, in accordance with the regulations;
Introduce a deeming provision, meaning goods identified as high-risk would be deemed prohibited from importation when mandatory information requirements are not met;
Allow the CBSA to designate a customs officer to determine whether imported goods are produced wholly or in part by forced labour and detain goods for a period of up to 90 days; and
Create a cost-recovery model when importers are found to have imported goods made using forced labour.
The new legislation therefore will outline mandatory requirements for importers of certain high-risk goods, the imports of which will be deemed prohibited if importers fail to meet the requirements.
Our team will continue to monitor further developments with respect to this new legislation and we will report updates on our website.
Takeaway
Businesses in Canada should review their policies in relation to forced labour and child labour in their supply chains and reach out to our team with any specific questions related to their business.
Contact info:
Exporting from Canada: Understanding the Benefits Offered by Free Trade Agreements (“FTA”)
Since 2025, changes in U.S. tariff policies spurred a need for Canadian businesses to diversify trade and expand into other markets. Traditionally, Canada’s trade performance relied heavily on proximity to and stable trading relationship with the United States than on firm-level efficiency and competitiveness (see report by Deloitte). Once the United States imposed tariffs on Canadian imports, it revealed that overreliance on the U.S. market meant Canadian companies were among the least prepared to react quickly when trade rules suddenly changed. This highlighted a need for Canadian companies to adopt new strategies such as diversifying trade.
This year in 2026, Canadian businesses will likely continue to face challenges due to ongoing U.S. tariffs, the CUSMA review, and increasing diversion of unfairly priced goods into the Canadian market. Most recently, the United States proposed new tariffs of 10% additional duties on imports from Canada. As such, adopting strategies to reduce reliance on a single market (i.e., the United States) and expanding sales by growing exports to other markets will help Canadian businesses protect themselves.
What the FTAs can offer
As Canadian businesses prepare to enter into other markets, they should consider the many trade compliance requirements. As mentioned in our blog, compliance considerations include obtaining export permits and considering sanctions imposed on specific markets.
That said, beyond compliance requirements, Canadian businesses interested in exporting their products abroad can take advantage of numerous competitive benefits available under 15 different free trade agreements (“FTA”). Under the FTAs, benefits that may be available to businesses include:
Reduced or eliminated customs tariffs and duties;
Eased sourcing and exporting which may result in having more globally integrated supply chains;
Access to additional markets which reduces reliance on a single market;
Reduced trade barriers that allow access to new customers in other countries.
The number of FTAs and thereby the number of markets into which Canadian businesses can enter may expand. Since 2025, Canada has made significant efforts to help Canadian businesses find new international markets for Canadian products. In January 2025, Canada’s FTA with Ecuador was concluded. Additionally, Canada has either agreed to formally launch or formally launched negotiations to enter into FTAs with the Mercosur Bloc (Argentina, Brazil, Paraguay, Uruguay), the United Arab Emirates, Thailand, and India.
FTAs offer preferential duty treatments and Canadian businesses are encouraged to explore how these FTAs can be used to reduce or eliminate customs tariffs and duties as they enter into a new market.
Takeaway
Canadian businesses should review the free trade agreements in place to identify new opportunities and reach out to our team to help understand how they can benefit from preferential tariff treatments offered by such FTAs.
Contact info: