If Trump imposes 50 per cent tariffs, should Canada hit back? Trade analysts disagree

WASHINGTON, D.C. — Canada’s trade negotiators are racing to avert 50 per cent tariffs on hundreds of Canadian exports, imposed under the never-before-used Section 338 of the Tariff Act of 1930 and scheduled to take effect on Aug. 19.

Canada-U.S. Trade Minister Dominic LeBlanc and Chief Negotiator Janice Charette are reportedly working with U.S. Trade Representative Jamieson Greer’s team on a deal to present to Trump early next week, aiming to avert the Section 338 tariffs and secure relief from Section 232 tariffs that have battered the lumber, aluminum and steel industries

While a source close to negotiations said the Canadian side is “cautiously optimistic,” there has been no public indication of a breakthrough. With Prime Minister Mark Carney having warned that “everything is on the table depending on the outcome of the negotiations,” trade watchers are contemplating possible next moves should Team Canada’s efforts fail.

Get a dash of perspective along with the trending news of the day in a very readable format.

A welcome email is on its way. If you don't see it, please check your junk folder.

If the 338 tariffs are imposed, some analysts think Canada should be prepared to retaliate, but the thoughts range from tough countermeasures to pursuing legal remedies.

“I think that the Canadian government should [have] said, ‘Okay, here’s our list of possible tariff countermeasures,” said Lawrence Herman, senior fellow at the C.D. Howe Institute and a specialist in international trade and investment law.

In fact, he thinks that list should have been produced immediately after the 338 tariffs were announced last month.

“You maintain those tariffs and enact them on the 19th of August, here’s the list that we’re going to use for our counter-tariffs,” he offered as an example of how Ottawa should have responded to the threat.

“That is the only thing that would have given us, in my view, some lever to go into the current round of talks.”

Having a list of products for potential counter-tariffs would be handy, agrees Inu Manak, senior fellow at the Peterson Institute for International Economics in Washington. But she does not want to see immediate retaliation if Section 338 goes into effect.

Instead, she recommends that Carney’s team pause and let the markets react, giving time for U.S. business pressure and congressional concerns to build before Ottawa imposes any countermeasures.

“Canada can be effective [by] … itemizing where future retaliation is possible” if the talks fail, she said.

“They should list it because then what it does is it creates this conversation …” she added, pointing to political candidates seeking votes in this year’s U.S. midterm elections.