President Donald Trump signed three proclamations July 20 imposing an additional 50% tariff on Canadian goods covering motor vehicles, alcoholic beverages and dairy products, according to a White House news release.
The move follows the Supreme Court’s Feb. 20 ruling striking down President Trump’s tariffs imposed under emergency economic powers. Since then, the administration has turned to other authorities to keep tariff pressure on trading partners, including invoking Section 122 of the Trade Act of 1974 within hours of the SCOTUS ruling, imposing a 100% tariff on patented pharmaceuticals through Section 232 of the Trade Expansion Act of 1962 in April, and proposing additional Section 301 of the Trade Act of 1974 tariffs on 60 economies over forced labor enforcement in June.
The AHA has warned that stacking tariffs across trading partners could worsen existing drug shortages and raise hospital costs, though Canada remains a comparatively minor device and drug supplier to the U.S. relative to countries like China and India.
Here’s what hospital and health system leaders need to know about the new tariffs:
- The tariffs take effect Aug. 19 under a rarely used authority. The action relies on Section 338 of the Tariff Act of 1930, an authority administration officials have called a last resort and confirmed has not been used this way before. All three proclamations apply the maximum 50% ad valorem rate the statute allows.
- Pharmaceuticals dodge a second tariff. The alcohol proclamation exempts “patented pharmaceutical articles,” along with steel, aluminum, copper and semiconductors, from the new 50% duty. Products already covered by the separate Section 232 pharmaceutical tariff don’t get this one stacked on top. For pharmacy leaders, that means no new tariff hit on Canadian-sourced patented drugs from this action.
- The timing lands close to a bigger pharmacy deadline. A 100% Section 232 tariff on patented pharmaceuticals takes effect July 31 for the first wave of large drugmakers, with a Sept. 29 deadline for the rest. This Canada action doesn’t change that timeline, but adds to the tariff activity health systems are tracking heading into it.
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