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The ongoing trade tension between America and Canada has now reached its lowest level. us President Donald Trump on Canadian products Heavy customs duty of 50% A big announcement has been made. The Trump administration has taken this strong step, accusing Canada of adopting “discriminatory treatment” with American automobiles, alcohol and dairy products. From a reporter’s perspective, this tariff, imposed using the historic ‘Section 338 of the Tariff Act of 1930’, will shake the foundation of the free trade agreement (USMCA/CUSMA) between the two neighboring countries.
Which Canadian goods will the 50% tariff apply to?
According to information released by the White House and three official orders from the President, this 50% tariff will go into effect within the next 30 days:
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Included accessories: Canadian wine, beer, whiskey, cement, furniture, clothing, paper, hockey sticks and other sporting goods will be subject to a 50% tax.
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Exempted Area: Essential raw materials like energy (oil and gas), potash, critical minerals and marine fish are currently kept out of this heavy tariff.
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Hit on USMCA agreement: The Trump administration has clarified that this 50% duty will also apply to goods that are covered under the US-Mexico-Canada Free Trade Agreement (USMCA).
Why did the Trump administration take this strict step?
The White House and the US Trade Representative (USTR) have given 3 major reasons behind this decision:
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Provincial bans on alcohol: A ban on the purchase and sale of American wine and alcohol products by most Canadian provinces and union territories.
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Discrimination in auto sector: Imposed a retaliatory tariff of 25% on American-made vehicles and a quota system, which reduced exports from American auto companies by 22%.
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Dairy Quotas: Treating U.S. cheese and dairy products unequally in the Canadian market compared to the European Union (EU).
Canada’s counterattack and impact on the global economy
Canadian Prime Minister Mark Carney has termed Trump’s move as a unilateral violation of the USMCA agreement. Canada says it only took similar steps in response to tariffs previously imposed by the US.
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Inflation and economic uncertainty: The economies of the US and Canada are deeply interconnected. This trade war will disrupt the supply chain in both the countries, which may increase prices of consumer goods and inflation.
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Impact on India and global markets: Global stock markets may see instability due to the trade war breaking out between two major Western economic partners. However, some new opportunities for textile, cement and manufacturing exports to the North American market may also open up for countries like India.