Throughout U.S. President Donald Trump’s volatile second term, Canada has enjoyed a relatively advantaged position when it came to trade access to the world’s largest economy – one that made it the envy of many other countries.
If Mr. Trump’s latest volley of tariffs against this country take effect next month, much of that benefit would evaporate, leaving Canada’s average effective tariff rate – a measure of duties collected as a share of total imports – just a notch behind that of France and Vietnam.
“Canada’s relative tariff advantage will shrink, but remain intact, if 338 levies are introduced,” National Bank of Canada economists Taylor Schleich and Ethan Currie wrote in a note. “This advantage has already stepped down from its ‘peak’ in Oct-25, when Canada’s tariff rate was 7 percentage points below the global average.”
There are a lot of “ifs” in any discussion of the new tariffs that Mr. Trump has threatened to apply against Canada under Section 338, a Depression-era provision that the U.S. has never used.
The 50-per-cent tariff on more than 500 categories of products is set to take effect on Aug. 19, and would apply to 5 per cent of Canada’s 2025 shipments to the U.S., or $20.1-billion worth of goods.
However, many economists, and even some of the companies that would be hurt by the punishing new duties, view Mr. Trump’s threat with a skeptical eye, chalking it up to a negotiating tactic.
That said, even the potential for Canada and Vietnam to share a similar-sized tariff wall speaks to how much the global trading order has shifted.
As it is, Vietnam is on a trajectory to surpass Canada as a source of U.S. imports. Since the start of 2025, U.S. imports from Canada have fallen 6.7 per cent to US$36.3-billion. Over the same time, shipments from Vietnam soared 67 per cent to a record high in May of US$21.8-billion.
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