US-Canada trade war deepens as Trump revives Depression-era trade tool – what’s at stake for consumers and the midterms

The United States and Canada have escalated their dispute into a full-blown trade war, The Conversation reports. On August 25th, Canada imposed tariffs of up to fifty percent on hundreds of American goods, after the U.S. placed similar levies on Canadian products, following the collapse of trade talks. The Trump administration invoked a never-before-used provision of the Smoot-Hawley Tariff Act of 1930, known as Section 338, which lets the president unilaterally impose fifty percent tariffs on countries deemed to discriminate against U.S. goods. Economists widely blame Smoot-Hawley for deepening the Great Depression. The tariffs hit twenty billion dollars in Canadian exports, including auto parts, forestry products, and whiskey, while Canada retaliated with its own twenty billion dollars in tariffs on U.S. goods like Wisconsin cheese, Maine seafood, and Kentucky appliances. U.S. consumers and businesses will face higher prices, especially in border states, and the political fallout could influence the midterm elections. The Conversation notes that the global trading system was designed to prevent such trade wars, and warns that returning to those days would bring unfortunate economic consequences.

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