Dorothy

On July 20, the White House announced the additional tariffs on certain Canadian goods, in retaliation for “unreasonable and unequal treatment” of U.S. alcohol, automotive, and dairy exports.

Canadian Prime Minister Mark Carney and U.S. officials acknowledged intense, last-minute talks before the deadline. The White House declined to comment at the time of publication.

But the political impact would likely have been bigger than the economic one. Canada had threatened to retaliate against any new tariffs with levies of its own, aggravating a trade fight between countries that sold each other $880 billion worth of goods and services last year.

Looking for an off ramp Nearly 72% of Canadian goods exports last year went to the United States. And the Trump administration might be wary of imposing a hefty new tariff - paid by U.S. importers who try to pass along the cost to consumers via higher prices - ahead of November’s midterm elections. American voters are already frustrated with the high cost of living.

Trump has made tariffs the centerpiece of his second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, justifying them by declaring the longstanding U.S. trade deficit a national emergency. The Supreme Court in February ruled that he’d overstepped his authority, striking down those tariffs and setting the stage for the federal government to pay refunds to importers.

Nearly a century ago, with the U.S. and world economies in collapse, Congress passed the 1930 tariff law, imposing hefty taxes on imports from around the world. Known as the Smoot-Hawley tariffs, for their congressional sponsors, they are notorious among economists and historians for limiting world commerce and making the Great Depression worse.