This article originally appeared in Real Clear World.
By Jamie Tronnes, August 17, 2026
President Trump’s latest Canada tariff punch is a message for the World — just not the one the Administration intended to send. The Administration wanted to project control, instead it looks unreliable.
The timing of the latest 50 per cent tariffs on some Canadian goods this July was no coincidence — they were announced just days before USTR Jamieson Greer announced new Section 301 tariffs on trading partners representing nearly 99 per cent of American trade. With the IEEPA tariffs struck down by the Supreme Court, and these new tariffs being put in place, the Administration wanted to send a message to all trading partners: do not retaliate.
For the most part, Trump’s attempts to tariff Canada — the removed IEEPA tariffs and the 301 tariffs on forced labor — have had an exemption for goods that comply with the USMCA trade deal. However, since early 2025 Trump was able to slap sectoral tariffs on Canadian goods as part of Section 232 authorities. The Canadians responded to these sectoral tariffs on Canadian steel, aluminum, autos and lumber by enacting sectoral counter-tariffs.
The Administration has complained that only two countries retaliated against 2025 American tariffs: China and Canada.
In slapping Canada with further tariffs the Trump Administration wants to make an example of Canada: the Administration can, and will, tariff any country that stands up for itself — and this despite USMCA, the free-trade agreement that was ratified by Congress and by Trump himself during his first term.
Countries will now see they have a choice: accept a once-unthinkable blanket tariff on their goods and services or expect Trump to dial it up to 50 per cent.
But the message that global investors will take from overriding the USMCA is that America cannot be trusted to stand by its agreements.
Congressional approval of the USMCA should count for something. American importing businesses who want to challenge the latest tariffs could find a sympathetic audience in the Supreme Court, who ruled that it is the responsibility of Congress to determine the course of tariffing other countries. Unlike nearly all the so-called “deals” that Trump has engaged with other countries on for tariff relief, the USMCA was voted on and passed by Congress; overriding USMCA is overriding congress.
USMCA was supposed to provide certainty for North American investment. Multinational companies could manufacture in the United States with inputs from minerals and metals-rich Canada, cheaper labor in Mexico, skilled labor in the US, and trade on the US stock exchange. This was the deal sold to investors.
Trump’s latest tariff salvo is a blatant power grab for the Executive Branch. The USTR had to crawl down into the dredges of economic depression history to find Section 338 of the Smoot-Hawley legislation to provide the President with tariffing authority. Court challenges will abound.
With a 100 per cent debt-to-GDP ratio, as long as tariffs are seen as a revenue source, they may be here to stay. However, the problem with tariffs as revenue is that successful tariffs diminish revenue because of onshoring. A vicious cycle of tariffs will be required to feed the beast. That means that a manufacturer who cannot source every single part, piece, or input domestically will be subject to the whims of whatever administration happens to be in power. If the cost of your manufacturing inputs changes with the whims of the White House, uncertainty is the only constant.
Breaking USMCA will immediately raise prices for American manufacturers — 66 percent of what Canada exports to the United States consists of primary or secondary inputs used in American manufacturing. As these input costs fluctuate, Canada’s geographical advantage remains: Canada is simply the closest source for pieces in the supply chain that America needs, a cost-offset that makes sense in a world of rising fuel and transportation costs.
We’ve reached a point of childish absurdity: the Administration is moving to try and kill backlash that would arise from mass retaliatory tariffs on the U.S. by retaliating against retaliatory tariffs on a country that it feels safe to do so against – Canada.
Tariffs are taxes paid by importers, not the exporters. Canadian officials know that raising costs ahead of the midterms will cost the Republicans at the ballot box. There certainly won’t be mass onshoring of manufacturing jobs from Mexico or Canada that Trump will be able to point to by the end of his presidency, much less the midterms.
In moving to cut off some USMCA trade, Trump is poisoning the well of certainty for the rest of his presidency, and it will cost America in new investment. America’s word is no longer its bond.
Jamie Tronnes is the Executive Director of the Center for North American Prosperity and Security.
