On the Tuesday, August 18, 2026, episode of The Excerpt podcast: Despite a major setback earlier this year when the Supreme Court ruled against his use of emergency authority in enacting tariffs back in April 2025, President Donald Trump continues to find ways to levy import taxes on friends and foes alike. That includes a whopping 50% levy aimed at Canada which, if negotiations fail, will go into effect on August 19th. Inu Manak, senior fellow at the Peterson Institute for International Economics, joins The Excerpt to share her insights.
Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.
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Dana Taylor:
To say that President Donald Trump is a fan of tariffs would be an understatement. Despite a major setback earlier this year when the Supreme Court ruled against his use of emergency authority on enacting tariffs back in April 2025, what he called, “Liberation Day,” Trump continues to find ways to levy import taxes on friends and foes alike. That includes a whopping 50% levy aimed at Canada, which if negotiations fail, will go into effect tomorrow, August 19th. Meanwhile, a new piece of legislation cloaked in the guise of Russian sanctions aims to effectively give the President carte blanche to levy tariffs on whichever countries he wants to. Is the President’s “America First Trade Policy” a win for the American people? And if not, why is Congress just giving away its constitutional authority?
Hello and welcome to USA TODAY’s The Excerpt. I’m Dana Taylor. Today is Tuesday, August 18th, 2026. Here to make sense of the tariff story and what it might mean for American consumers is Inu Manak, a senior fellow with the Peterson Institute for International Economics. Inu, thank you so much for joining me.
Inu Manak:
It’s great to be here.
Dana Taylor:
I want to start with the 50% tariff on Canadian goods, which if negotiations fail, will go into effect at midnight on Wednesday. These tariffs would effectively undermine the very trilateral trade agreement that the first Trump administration negotiated and signed at USMCA. Is this just political theater here–or what’s at the heart of this threat, do you think?
Inu Manak:
Well, I think a lot of this is happening in the shadow of ongoing discussions over the USMCA agreement. That’s the US, Canada, Mexico Agreement, that was negotiated and signed by President Trump in his first term. Now, that was not renewed this year when the deadline had passed on July 1st, and the parties have been trying to negotiate what a future agreement would look like. Now, Canada has not had a separate formal process to negotiate those terms, unlike Mexico, which has, and they’ve had several meetings already. So there is some tension there about whether or not Canada has been as committed to this process as Mexico has, and some frustration on the United States side about coming to some sort of conclusion there. So I think if you’re looking at these new tariffs that have been threatened by President Trump, there’s a really good chance that these are additional leverage in those negotiations to try to conclude that deal well before the year is over.
Dana Taylor:
Assuming these negotiations do fail, what kinds of imports will these tariffs apply to and what might their impact be on the American consumer and economy in general?
Inu Manak:
Well, it’s really interesting when you’re looking at the way that these tariffs spread out. The new tariffs target a lot of specific products, but cover about 5% of overall Canadian imports to the United States. And unlike previous tariffs, there’s no exemption for Canadian products that comply with the trade agreement, but there are exemption for things like energy, potash, and products subject to tariffs under the national security tariff actions and other goods such as fish or critical minerals. So the president is not targeting products that the United States really depends on Canada for.
But importantly, if you’re looking at those targeted products, they make up about 0.5% of US imports. So the effect here at home overall is going to be small, also because those are products that we can import from other places. 80% of Canada’s exports will continue to be duty-free. Now, if you look at where those other tariffs are hitting, alcoholic beverages such as wine, beer and spirits, range of other goods are also targeted such as wood and paper products, things like grease-proof paper, kitchen and tableware and bamboo items, machinery and electrical equipment, and also some sporting goods. So at this point, it’s really hard to tell what the overall price effect will be. We’ll have to see what happens if these tariffs actually go into effect. But because it covers such a small portion of US imports, we’re not expecting this to be a major impact here at home in the United States.
Dana Taylor:
Inu, unlike other tariffs we’ll talk about in a second, these new Canadian tariffs are being authorized under a novel argument using the Smoot-Hawley Act. Why is that noteworthy?
Inu Manak:
So this is a really interesting piece of legislation. Congress passed what is called Section 338 of this Hawley Act in 1930. It was to give the president the authority to impose tariffs if a foreign country discriminates against US products, but it’s relative to how it treats products made by third countries. The law basically allows the president to enact the tariffs up to 50% to offset the burden or disadvantages treated by that kind of discrimination. Now, if we’re looking historically, this law has never been used to impose trade restrictions. There is one instance where there was a finding of discrimination that was made by the president with regard to Germany and Australia in 1935. But in that case, no action was ultimately pursued.
Now, the primary purpose, I think, if we had to unpack that of the law, was to encourage other countries to provide similar treatment for US trade as it did to other countries. And that seems quite different here than what the administration may be trying to do. So what’s really interesting about the use of this is it’s the first time President Trump has used it. It’s the first time that we’re starting to hear a little bit more about the potential of how this could be applied. But the bottom line is that there’s no really clear understanding of what the process is with this statute and what the impact of it will be in terms of how it plays out over time.
Dana Taylor:
As I mentioned at the top, the Supreme Court ruled against Trump’s Liberation Day tariffs earlier this year, and that’s resulted in roughly $166 billion worth of refunds being issued. Are consumers likely to see any of that money?
Inu Manak:
Well, those tariffs that were overturned by the Supreme Court have continued to be litigated in terms of companies trying to get refunds, and this has been a slow process. Importantly, was importers that paid a lot of those tariffs, some of that cost was passed on to consumers. And so far consumers have seen very little of those refunds. And so I would imagine that that’ll continue to be the case simply because there’s still a lot of ongoing litigation and there are fewer companies that have been willing to actually pass that onto consumers in terms of the refund benefit that they’re getting back.
Dana Taylor:
It’s hard to argue that the chaotic rollout of tariff policy in the second Trump administration hasn’t been extremely disruptive to small and large businesses alike. Businesses crave certainty when it comes to planning for purchasing, spending, hiring decisions. Does the rollback of Trump’s 2025 tariffs guarantee a seamless recovery for business or do these tariffs leave a mark?
Inu Manak:
Well, I think the legacy of the IEEPA tariffs that were imposed by President Trump early on in his second term continue to have an impact in the sense that we’ve seen the administration try to replace them ever since they’ve been overturned by the Supreme Court. So we already had a replacement that just expired last month, which was through Section 122. It was a balance of payments authority that was also a very rarely used statute. That’s being litigated as well right now, even though those tariffs have lapsed. So we may see continued legal action on those. And then we’re seeing additional tariffs that could go into a place following the ones that we have just imposed under Section 301, which is another unfair trade practices law. And that was for forced labor that we recently saw the administration put those tariffs in effect.
So what we’re seeing are tariffs that keep coming up over and over again to create a new tariff baseline, a level that will apply to all countries that this administration’s been trying to solidify under these various statutes. And then the question becomes, will these stick in terms of will there be other court challenges? And will Congress do anything about it either? So at this point, I would say the uncertainty is pretty much here to stay, although we seem to be settling upon a basic baseline of about 10% or so that most imports face with some different specifications for certain countries and certain products.
Dana Taylor:
I want to shift to the tariffs you’ve just mentioned. These tariffs have been levied on 60 countries that went into effect in July. Where are these tariffs effectively being applied?
Inu Manak:
So these tariffs under Section 301 are being applied to a range of products as a baseline tariff to all imports coming in from these countries. There’s a 10% across the board tariff on a select group of countries, including Argentina, Bangladesh, Cambodia, Canada as well, and several others. So there’s about a handful there. And then there’s another set of countries where there’s a 12.5% tariff put in place, including Japan, South Korea, and in Switzerland, for example. So we’re seeing a variation in the tariffs that are being put in place there. And importantly, these are separate from a lot of the tariffs that have already been put in place on certain products, just steel and aluminum. Those are those national security tariffs on copper and automotives as well. So we’re seeing a broad range of tariffs, some on specific products that the president has claimed are for national security, and then these broader tariffs under Section 301, which were largely put in place to replace those 122 tariffs and also the IEEPA tariffs that were put in place earlier last year.
Dana Taylor:
As you mentioned, Inu, these new tariffs were put in place under the authority, the 1974 Trade Act, entailing the use of forced labor. Are these countries in fact using forced labor? Is there any truth to that assertion? And if not, are we potentially looking at another rollback and another round of refunds down the line?
Inu Manak:
Well, the administration is claiming that countries that it alleges are accounting for nearly all these US imports have failed to implement or enforce effectively prohibitions on the import of goods into their own countries made with forced labor, claiming that those products then make it into the United States market. The apparent goal, I would say, however, is not really dealing with forced labor necessarily. It’s to establish a new tariff baseline to replace the one that was struck down by the Supreme Court earlier this year.
Now, if you’re looking at the investigation that took place, it was a very quick investigation. They usually take much longer than what we’ve seen so far. There is a question about whether or not countries that are meeting some of their own legal requirements in enforcing these bans on goods of forced labor could have these tariffs removed or not. At the end of the day, section 301 is a law that gives the United States trade representative full discretion in deciding what qualifies as a discriminatory trade action, which facts to consider in making that determination, and what the punishment should be. And Congress plays almost no oversight role in that, and the courts have been really reluctant to push back.
So whether or not the evidence suggests that there is a problem, the United States trade representative doesn’t really have to show very much of that. And that may be what’s at issue when there is litigation on this new tariff action. But so far, most countries have pushed back and said that they are actually doing a lot to curtail the import of goods with forced labor, and the amount of products that could be coming in is incredibly small. And so the problem is much smaller than what USTR has claimed it to be.
Dana Taylor:
Let’s turn now to a bit of legislation recently passed by the Senate, ostensibly to punish Russia for its invasion of Ukraine. It still needs to pass the House, which is currently in recess until the end of August. The bill is named after the late Lindsay O. Graham, who was its biggest proponent. Let’s start with the sanctions part of the bill, which allows the president to effectively punish the five largest buyers of Russia’s oil and gas. Does the bill say which countries we’re talking about here?
Inu Manak:
So the bill that just passed the Senate that you mentioned authorizes the president to levy tariffs up to 100% on all goods from countries that purchase Russian oil or natural gas without a specification of what those countries could possibly be. Now, importantly, this is really beyond what any current trade law really allows in terms of the rate of the tariffs, the scope of the coverage, and discretion to the president in deciding the tariff action against whatever countries he decides. There’s also virtually no role for Congress. If this power is given away, there’ll be no way for Congress to actually easily get it back. There was plenty of discord over the bill when it was in the Senate. Senator Paul and Senator Wyden both tried to include an amendment that would strip the bill of the tariff authority in particular, but that failed by a 64 to 32 floor vote. However, it’s important to note that a third of the Senate favored stripping the tariff language, which tees up the debate that’s likely to take place in the House itself.
Now, if this were to pass the House, it would be a massive expansion of presidential tariff power and a major delegation of congressional authority over tariffs that would take us back to the uncertain world before the Supreme Court ruling in the learning resources versus Trump, which was what overturned the IEEPA tariffs. So I think that that’s an important thing to keep in mind, but also it’s important to keep in mind that these tariff provisions are entirely unnecessary. And we do have sanctions laws on the books that could be used to effectively target those firms that purchase Russian oil and gas instead of putting a punitive tariff on American consumers of products that are imported from our trading partners.
Dana Taylor:
The bill also gives the president waiver authority. What is that?
Inu Manak:
So the waiver authority also allows the president to pick and choose essentially who this would apply to in terms of the sanctions. So again, this bill gives plenty of discretion to the president in terms of deciding the types of punishment that would be applied and the scope of that as well.
Dana Taylor:
And finally, Inu, what are you watching for next in the economy with regards to tariffs?
Inu Manak:
The biggest thing that is a thing that we should be watching in the coming months ahead is what exactly happens with all the different tariff authorities and the different tariffs that get imposed by President Trump. So we already have these section 301 tariffs on forced labor. We are likely to have additional tariffs under that same law that deal with what’s called excess overcapacity. That’s the claim that countries are dumping a lot of products on the US market unfairly, and that can lead to an additional set of tariffs in the next couple of months. And we have to see what happens with the 338 tariffs against Canada. That, we’ll know fairly soon, but that could also impact the overall direction of negotiations on the USMCA, and also a very tense relationship with United States’s largest trade partner.
Dana Taylor:
A lot to keep our eyes on over the next weeks and months. Thank you so much for sharing your insights and expertise here, Inu.
Inu Manak:
Thanks for having me.
Dana Taylor:
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