A container ship at the Port of Los Angeles on May 28. Washington said it plans to impose new tariffs of at least 10 per cent on dozens of trade partners.Mario Tama/Getty Images
The Trump administration is proposing a new 10-per-cent tariff on goods from Canada and other trading partners in an attempt to rebuild the tariff wall that was struck down by the U.S. Supreme Court earlier this year.
However, the proposed tariff appears to maintain an exemption for Canadian products that comply with the rules of the United States-Mexico-Canada Agreement – a carve-out that would significantly reduce the bite of the duties.
The Office of the U.S. Trade Representative, or USTR, published a statement late Tuesday laying out tariffs of between 10 per cent and 12.5 per cent on 60 countries.
The office said the tariffs are being imposed, using Section 301 of the 1974 Trade Act, because of countries’ failure to curb imports of products made with forced labour – an allegation Canada and other U.S. trade partners have disputed.
The proposed levies are the administration’s latest attempt to fulfill U.S. President Donald Trump’s goal of a global tariff regime hitting virtually all of America’s trading partners. He initially announced the protectionist program with much fanfare in April, 2025, on what he dubbed “Liberation Day,” only to see the U.S. Supreme Court dismantle large parts of it in February.
The Trump administration proposed imposing additional duties of 10 per cent or 12.5 per cent on imports from 60 economies after determining they failed to curb trade in goods made with forced labour.
Reuters
Under the new tariff proposal, USTR has said there will be a 10-per-cent tariff on Canada and 15 other countries for allegedly not doing enough to enforce bans on forced labour in their supply chains. A higher 12.5-per-cent tariff will apply to 44 other countries.
Canada and Mexico, however, seem to have again been offered a significant carve-out. The new Section 301 tariffs won’t apply to products that meet USMCA rules of origin. This is similar to earlier exemptions to countrywide tariffs the Trump administration offered its neighbours.
Prime Minister Mark Carney said Wednesday that the “vast, vast, vast majority of Canadian trade” would be unaffected by the proposed levy and the state of play would be “the same as before.”
He also promised changes to Canadian laws and regulations against the use of forced and child labour in the country’s supply chains to make the rules more effective. Such changes would be unveiled over the coming weeks, he said.
“We support the overall objective” of eliminating forced labour, he told reporters before a caucus meeting on Parliament Hill. “We’re working toward making it more effective.”
Prime Minister Mark Carney says Canada will introduce legislation to address forced and child labour after the U.S. proposed a new 10-per-cent tariff on Canada and other countries following an investigation into forced labour in supply chains.
The Canadian Press
This is not the first time the Trump administration has leaned on security or human-rights concerns to provide the legal basis for its aggressive trade measures. Last year, it imposed tariffs specifically on Canada, Mexico and China after declaring a national emergency on fentanyl trafficking – even though very little fentanyl enters the U.S. through Canada.
The proposed tariffs do not come into force immediately. There will first be a public comment and review period, in which the tariff proposals may change. Written comments are due on July 6, and hearings will begin on July 7.
Through much of last year, Mr. Trump relied on the International Emergency Economic Powers Act (IEEPA) to place double-digit tariffs on dozens of trading partners in an attempt to restructure the global trading order and squeeze concessions from other countries.
But this tool was taken away from the administration in February when the U.S. Supreme Court found that Mr. Trump was acting beyond the powers granted to him under the act by Congress.
The administration responded by implementing a new round of temporary tariffs under Section 122 of the Trade Act of 1974, which allows the President to levy tariffs for up to 150 days. These tariffs, which have maintained the carve-out for USMCA-compliant goods, are set to expire on July 24.
The USTR also launched two Section 301 investigations: one into forced labour and one into “structural excess capacity” in manufacturing. Canada is not subject to the latter probe.
Opinion: Is Canada even serious about confronting forced labour?
The U.S. has used Section 301 tariffs against China for years, and these are seen by trade experts as a more legally durable basis for the administration’s tariff regime.
The Trump administration is trying to replace the tariff revenue stream it lost in February. It had collected around US$130-billion using the now-defunct IEEPA tariffs, and it has been ordered by U.S. courts to pay that back. That refund process is continuing.
It is also looking to re-establish its leverage over other countries.
Last year, Washington reached what it called “agreements on reciprocal trade” with nearly 20 economies, including major trading partners such as the European Union, South Korea and Japan. These agreements forced the partners to open their markets more to American goods and make investments in the U.S. in return for lower IEEPA tariffs.
The Supreme Court decision on IEEPA called into question the legal basis of these agreements, although no country has reneged on their side of the deals.
Dominic LeBlanc, the federal Minister responsible for Canada-U.S. trade, said in a social-media post on Wednesday that the new tariffs did not come as a surprise.
“The United States has stated its intention to replace existing baseline global tariffs imposed under Section 122 when they expire in July,” he wrote.
LeBlanc offers ‘specific proposals’ to end trade war, calls for USMCA to be renewed for 16 years
Mr. LeBlanc was in Washington on Tuesday to meet with U.S. Trade Representative Jamieson Greer. He told reporters after the meeting that he and Mr. Greer had discussed Canada’s commitments to addressing forced labour as part of a broader conversation. He said he went to Washington with “a number of specific proposals” to address U.S. trade concerns.
“We don’t get panicked by turbulence. We’re not going to take off our seatbelt, walk around the aisle, break down the cockpit door and start pushing buttons in front of the pilots,” he told reporters.
Ottawa is negotiating along two lines. It is trying to get the U.S. to lower sectoral tariffs on autos, industrial metals and wood products, while aiming to successfully renew the USMCA. The trilateral trade deal is up for mandatory review on July 1, although all three countries have said they expect trade talks to continue beyond that date.
On Wednesday, Ottawa moved to defuse one trade irritant with the U.S. by backpedalling on requirements that foreign streaming services pay for Canadian content.
Culture Minister Marc Miller told the Canadian Radio-television and Telecommunications Commission to review an order issued last month for foreign streamers and Canadian broadcasters to spend money to either buy or produce Canadian-made programs.
Washington has repeatedly complained about Canada’s Online Streaming Act, under which the CRTC issued the order.
Editor’s note: Due to an error introduced in editing, a previous version of this article incorrectly referred to the 1947 Trade Act. The act was introduced in 1974.