New tariffs have kicked in on U.S. imports from Canada after trade talks collapsed. Canada intends to set retaliatory tariffs starting in September. Here’s what to know about the new levies.

The Trump administration's latest round of 50% tariffs on Canadian goods, valued at over $28 billion, went into effect just after midnight on Saturday, August 22, after last-minute trade negotiations failed. These tariffs apply to a wide range of products, from plywood and cement to wine and hockey sticks, with Canada's electronics sector facing the biggest hit, impacting over $4 billion worth of exports. The plastics industry, with about $3 billion in affected items, will also suffer.

Canadian Prime Minister Mark Carney announced that Canada would retaliate "dollar for dollar" against the American levies, although specific counter-tariffs are expected to start in September. US Trade Representative Jamieson Greer stated that talks crumbled because Canada rejected the proposed agreement, accusing Canada of introducing new demands and walking back commitments. The US cited Canada's continued retaliation against US trade policy, including prohibitions on certain American goods and discrimination against US dairy, alcohol, and automotive sectors, as reasons for the tariffs.

The tariffs are imposed under Section 338 of the US Tariff Act, a nearly century-old law that permits tariffs of up to 50% on countries deemed to discriminate against the American economy. While in the past tariff rates were typically lower, goods compliant with CUSMA are no longer exempt in many cases. The Canadian Chamber of Commerce called the new levies a "body blow" to North American competitiveness, warning that a 50% tariff is not sustainable for businesses. British Columbia and Quebec are expected to be disproportionately affected, with more than 13% and roughly 10% of their respective exports to the US now exposed to these duties.

The US had previously delayed the implementation of these tariffs by three days, from August 19 to August 22, to allow for continued negotiations. Despite the delay and intensive talks, a deal could not be reached. The White House justified the tariffs by stating they respond to Canada's "discriminatory treatment of American products" and aim to "level the playing field for crucial American exports—cars, alcohol, and dairy."