WASHINGTON: President Donald Trump announced possible new tariffs on Canadian dairy and lumber, citing unfair trade practices.
He accused Canada of overcharging U.S. farmers and pledged to impose matching tariffs on dairy imports.
Trump had previously paused tariffs for a month under the USMCA but reversed course with this new threat.
He suggested the tariffs could take effect as early as Friday or early next week.
The decision has injected more uncertainty into markets and global trade relations.
Market Reaction
Stock markets reacted negatively, with major indices showing volatility after Trump’s tariff announcement.
The Dow saw a brief drop but later recovered slightly, while the Nasdaq remained down.
Economic experts warn that the new tariffs could increase inflation and slow economic growth.
Consumer confidence is already declining, and tariffs may worsen hiring slowdowns and job losses.
Tariffs could also further strain U.S.-Canada trade relations, impacting multiple industries.
Dairy Trade Dispute
Canada imposes high tariffs on dairy imports, including a 241% tariff on American milk.
This policy has long frustrated U.S. dairy farmers, who claim it puts them at a disadvantage.
In 2023, a trade panel ruled that Canada’s tariffs did not violate the USMCA agreement.
Wisconsin Senator Tammy Baldwin criticized the decision, saying it harmed American dairy producers.
Trump previously criticized Canada’s dairy policies but did not renegotiate them under the USMCA.
Impact on Lumber
Trump also called for tariffs on Canadian lumber, arguing the U.S. has enough domestic resources.
Industry experts disagree, warning that tariffs could raise construction costs.
The U.S. imports about 30% of its softwood lumber from Canada, crucial for homebuilding.
Existing duties on Canadian lumber imports already stand at 14.5%.
Higher tariffs could worsen the U.S. housing affordability crisis by driving up building costs.
Economic Concerns
Businesses and investors remain uneasy about sudden shifts in U.S. trade policy.
Layoffs are increasing, and economic growth is slowing amid rising inflation.
New tariffs could make imports more expensive, affecting American consumers.
The housing market, already struggling with affordability, may face further disruptions.
Experts caution that retaliatory tariffs from Canada could escalate the trade conflict further.
Ongoing Uncertainty
Trump’s frequent shifts in tariff policy create confusion for businesses and investors.
Many industries had hoped for stability under the USMCA pause announced earlier.
Now, businesses must prepare for potential new trade restrictions.
Observers are closely watching how Canada and global markets react.
Trump’s administration continues to face criticism for unpredictability in economic policy.
