The 1930s Called. They Want Their Bad Ideas Back.
You Can Take Your Smoot And Shove It Into Your Goddamn Hawley
Ah, the 1930s, what an absolutely amazing time to be alive.
Fascism was on the rise in Europe.
A quarter of the US workforce was unemployed and standing in bread lines.
The Great Plains turned into a giant dust bowl.
And banks were collapsing faster than people’s hopes and dreams.
Then, two dudes named Smoot and Hawley decided the best way to fix the American economy was to tax the crap out of imports.
They jacked up tariffs to nearly 60%.
The rest of the world retaliated, imposing their own reciprocal tariffs.
US exports cratered.
Global trade dropped by 65%.
The move made the Great Depression even more… depressing.
Fast forward to July 2026, and The Donald just slapped a 50% tariff on a new set of Canadian goods.
Does it feel like history repeating? You tell me.
The “pretty strange list” of impacted products includes cement, paper products, down jackets, hockey sticks, and rye whisky.
The reason?
Canada put countertariffs on US vehicles, costing the American auto sector billions in lost exports.
Wildfire smoke might also be the cause; no one will say.
The irony is thick enough to choke on.
The Donald signed the CUSMA (USMCA) deal. It’s his deal.
Canada’s countertariffs were a direct response to the 25% auto tariffs the US initially imposed in April 2025.
They punched us.
We punched back.
Now they are punching again because we dared to punch back.
This is nearly exactly how Smoot-Hawley destroyed global trade.
An Old Hammer Looking For A New Nail
Honestly, I can’t believe I’m talking about tariffs again (still).
Like WTF.
The legal authority the US is using for this new 50% hit is Section 338, a provision buried in the Tariff Act of 1930, the legislation that gave us Smoot-Hawley.
Dormant for 96 years, Section 338 allows The Donald to impose tariffs of up to 50% if a foreign country “discriminates” against US commerce. He is arguing that Canada isn’t just retaliating against US tariffs, but actively discriminating against the US because Canada isn’t applying those same retaliatory tariffs to Europe or Japan.
The Donald’s administration’s earlier attempt to use the International Emergency Economic Powers Act (IEEPA) for blanket tariffs got struck down by the courts.
But Section 338 is different.
It requires almost no investigation and gives The Donald massive discretionary power.
CUSMA… Never Heard Of It.
CUSMA was supposed to prevent exactly this kind of cross-border trade war.
But earlier this month, the US officially declined to extend the agreement during its mandatory six-year review.
Technically, the deal remains in force until 2036.
In practice, the US just signalled it wants to rip the whole thing open again.
These new Section 338 tariffs are a massive, blunt instrument designed to force Canada into making concessions at the negotiating table.
The administration wants to tighten the rules of origin for vehicles even further, pushing for a “Fortress America” manufacturing strategy.
Shooting Your Own Supply Chains In The Head
But 2026 is not 1930.
Back then, we traded finished goods.
Today, we trade components.
A car built in North America crosses the US, Canadian, and Mexican borders multiple times before it arrives at a dealership.
Taxing those border crossings does not bring manufacturing jobs back.
It just makes cars more expensive.
In the near term, the auto industry is going to bleed cash.
The Center for Automotive Research says the 25% auto tariffs alone cost US automakers $108 billion in 2025.
Automakers are already pausing production lines and delaying investments because they don’t know what the rules will be next month, let alone next year.
If automakers cannot rely on an integrated North American supply chain, they have to build redundant, inefficient supply chains entirely within the US.
That cost gets passed directly to the consumer.
Everyone Loses, No One Wins
The Section 338 tariffs have a delayed implementation date of August 19.
That is a 30-day window for both sides to try to figure something out.
Prime Minister Mark Carney has signalled Canada will negotiate rather than immediately retaliate again.
The most likely outcome is a messy, drawn-out negotiation where Canada makes some concessions on auto content rules or dairy quotas to get the 50% tariffs lifted.
But the damage to trust and supply chain efficiency is already done.
IMHO
Every time the US imposes tariffs, trading partners retaliate.
The US then uses that retaliation as justification for more tariffs.
The cycle repeats until someone blinks or the courts step in.
Canada is not the problem.
Canada is the US’s largest automotive trading partner, the country that shares the most integrated manufacturing ecosystem on the planet with American workers and American factories.
The vehicles rolling off assembly lines in Windsor and Oshawa contain American-made components.
The vehicles rolling off lines in Michigan and Ohio contain Canadian-made components.
You cannot separate these NAFTA-born supply chains with a tariff.
The August 19 implementation date is not a coincidence.
It is a countdown clock designed to pressure Carney into making concessions before the tariffs impact begins to hurt.
Maybe that is a legitimate negotiating tactic. Maybe.
But it will only work if the other side believes you are actually willing to pull the trigger, and it only produces good outcomes if the concessions you are demanding are reasonable.
Pushing vehicle rules of origin from 75% to 82% US content, with a hard 50% floor specifically in the US, would force automakers to restructure supply chains that took decades to build.
The cost of that restructuring does not land on Canada. It lands on American consumers who will pay more for every vehicle they buy, and on American workers whose plants depend on affordable Canadian inputs to stay competitive.
The deeper irony is that the US midterms are on the horizon, and the administration is betting that tariff toughness plays well with voters.
It might, in the short term.
But by the time the structural damage to the auto industry shows up in plant closures and price increases, the political calculus will have shifted.
Smoot-Hawley was popular when it passed (I know, weird, right?).
The economic devastation it caused took years to materialize.
In the here and now, Canada has leverage it has barely used: energy exports, critical minerals, and the political will of a country that has watched its closest ally treat it like an ass for 18 months.
Carney’s instinct to negotiate rather than escalate is the right one.
But negotiating from a position of strength means being willing to walk away from a bad deal, and being clear about what a good deal looks like.
A renegotiated trade deal that works for both countries is possible.
A deal signed under duress, with Canada giving up supply management and auto content protections to stop the bleeding, is not a good deal.
The question is not whether Canada can survive this trade war.
It can, and it will.
The question is whether the US is willing to stop treating its most reliable trading partner like a problem to be solved rather than an ally to partner with.