With both sides blaming the other for this weekend’s trade talks collapse, President Trump slapped 50% tariffs on roughly $20 billion in Canadian imports, including a wide variety of products from dairy, wine, and cement to hockey sticks. The tariffs were imposed under Section 338 of the Tariff Act of 1930, which is expected to face legal challenges soon. As with prior tariff programs, the products subject to Section 338 tariffs are determined by their HTS code. The scope is fairly broad and may include certain agricultural, food, wood, and other products. The specific HTS code should be reviewed to determine whether the additional tariff applies to any products of concern.
Further escalating the trade war, President Trump announced in a Truth Social post on August 24 that, effective January 1, 2027, he will double to 50% current tariffs on Canadian cars, auto parts, trucks, and steel. It is not clear under what legal authority the Administration would impose the threatened tariffs.
Canadian Prime Minister Mark Carney promised to retaliate “dollar for dollar” with tariffs, and indeed, on August 25, Canada announced it would double its tariffs on American steel and aluminum to 50%, starting September 8. This would match the 50% tariff the United States announced on Canadian steel and aluminum. Canada also announced tariffs ranging from 15% to 50% on about 700 other products, including milk and other food products, wood, paper, aluminum foil, and railway construction materials. Appliances, agricultural equipment, plastics, and electronics also will be subject to tariffs.
Also on Monday, Treasury Secretary Scott Bessent announced a broad campaign of financial sanctions and diplomatic pressure aimed at isolating Iran from the global economy. Little detail about “Operation Economic Outcast” was provided, and countries that could face secondary sanctions were not named, but Secretary Bessent told reporters that President Trump was “making phone calls to world leaders with specific requests to cease their interactions” with Iran and was already seeing results. When asked whether China was a target, Secretary Bessent said that “no one is above the reach of U.S. sanctions.” Whether these warnings lead to actual sanctions and/or results remains to be seen.
The U.S. Debt has reached $40 trillion for the first time ever, representing a significant policy challenge. Recent reporting highlights that tariffs are a potential solution in the administration's view, and that restoring tariff revenue to 2025 levels is a specific goal.
Also, a report from the Boston Fed highlights the impacts of the tariffs on the sectors that have borne the greatest burden and sheds light on why assessing their impact is complicated. Major findings include:
Last week a 17-state coalition with the National Association of Wholesaler-Distributors (NAW) as its only business plaintiff has asked the United States Court for the Eastern District of California to issue a preliminary injunction blocking California from enforcing its packaging extended producer responsibility (EPR) law, SB 54 (“Plastic Pollution Prevention and Packaging Producer Responsibility Act”), until the court decides the broader legal question of whether the law is constitutional. That lawsuit was initially filed in late June of this year. CalRecycle and CAA have yet to file opposition to the motion, and either party could move for an expedited schedule. A hearing on the motion is currently scheduled for January 15, 2027.
Most notable is the scope of relief requested: if granted as drafted, the injunction would effectively block the entire SB 54 program for all covered producers, as both the state regulators and the Producer Responsibility Organization (PRO) would be enjoined from implementing and enforcing the program. This differs substantially from the February 2026 injunction issued in the Oregon EPR litigation, where only the named plaintiffs were granted relief.
Along with their motion for a preliminary injunction, plaintiffs filed an amended complaint raising new arguments. Because a different lower court preliminary enjoined (under SB 343) the recyclability requirements upon which SB 54 relies, plaintiffs now argue that the rest of the EPR statute is unconstitutionally vague. The amended complaint separately asserts that SB 54’s definition of “covered material” fails to provide fair notice to producers as to whether their products are affected.
This litigation is significant because California is the world’s fourth-largest economy; therefore, an EPR mandate of this scale affects any supply chain intersecting with California commerce. A court-ordered suspension of the program might prompt producers to reevaluate compliance investments, while denial of the motion could accelerate producers’ compliance deadlines. Either result merits close monitoring. Click here for a summary of these developments from Foley and Lardner LLP.
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Disclaimer from Progressive Trade Consulting: PTC is not a law firm, does not practice law, and does not provide legal advice. The Client should consult legal counsel for any legal matters, including trade compliance. The Importer of Record (IOR) is responsible for complying with customs regulations and managing the import process. This includes obtaining required licenses and permits, classifying and valuing goods correctly, declaring goods accurately, paying duties and taxes, following import rules, and maintaining proper records.