Carney embraces EU associate membership as US import ban clouds USMCA future

Trade attorney: 50% tariffs already acting as ‘de facto ban’ on Canada

Canadian Prime Minister Mark Carney has embraced the prospect of Canada becoming the European Union’s first associate member as the United States moved ahead at 12:01 a.m. Eastern time Tuesday with a ban on nearly $1 billion in Canadian imports of alcoholic beverages, dairy products and motorcycles. The action, designed to punish Canada for retaliating against earlier US tariffs, threatens the future of the US-Mexico-Canada Agreement — a North American trade pact Carney has worked to distance Canada from since taking office pledging to stand up to President Donald Trump.

The ban amounts to barely a ripple in the $880 billion in annual two-way trade between the two northern neighbors, but it marks another ratcheting up of Trump’s second-term trade war with the United States’ longtime ally and trading partner.

Jacob Jensen, director of trade policy at the center-right American Action Forum think tank, calculated the scope of the ban at $967 million based on 2025 import figures. Alcoholic beverages account for 87 percent of the affected products, with the United States having targeted alcohol in retaliation for some Canadian provinces removing US alcoholic beverages from store shelves in response to earlier US tariff actions. Also banned are some dairy products, including the milk byproduct whey, and Bombardier Recreational Products-manufactured motorcycles.

Bombardier Recreational Products, based in Quebec, confirmed that its three-wheel Can-Am Spyder and Canyon motorcycles “will be excluded from importation into the US.” The company said the practical impact would probably not be felt until next year because it had completed most production and shipments for the current season.

The two countries have long clashed over Canada’s attempts to protect its dairy industry from foreign competition by imposing hefty tariffs once dairy imports have exceeded a quota.

Trade attorney Patrick Childress, a partner at Holland + Knight and a former US trade official, said the ban “certainly won’t do anything to help the trade tensions between the United States and Canada.” He noted that the economic effect would likely be minimal because the 50 percent tariffs imposed over the summer had already made importation from Canada uneconomical. “For a lot of these goods, the 50% was already acting as a de facto ban by making importation from Canada into the United States uneconomical,” Childress said.

The summer tariffs, imposed under a Great Depression-era law, hit approximately $20 billion in Canadian goods, with Trump charging that Canada discriminates against US dairy, auto and alcoholic beverage producers. Canada retaliated with tariffs of 15, 25 or 50 percent, matching US imports dollar for dollar.

Jensen said the latest action “marks yet another escalation in the trade war that may result in further retaliation on the Canadian side.” He said he expected Canadian exporters and US importers “impacted by these bans will be highly motivated” to demand that trade officials on both sides find a “resolution of this whole ordeal.”

In addition to retaliating against earlier US tariffs, Carney — who came to power last year pledging to stand up to Trump — has sought to reduce Canada’s reliance on the United States, which last year accounted for more than 70 percent of Canadian exports. Earlier this month, Carney said, “There is now a price to be paid for access to the United States market.” He has embraced the prospect of Canada becoming the European Union’s first associate member.

The dispute threatens the US-Mexico-Canada Agreement, a North American trade pact Trump pressured the region’s neighbors into accepting in his first term and once described as “the most modern, up-to-date, and balanced trade agreement in the history of our country.” The deal allowed most goods to cross North American borders duty free, but since returning to the White House last year, Trump has announced a series of tariffs that have clouded the future of regional trade.

Trump has directed most of his trade pressure at Canada, openly seeking to pull Canadian manufacturing south of the border and inflaming public opinion in Canada by repeatedly suggesting the country become the 51st US state.