Trump's new tariffs on Canada and generic drugs alarm Republicans ahead of midterms

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Tariffs are back — and they couldn’t come at a worse time for the GOP.

Some Republicans fear the eye-popping new levies President Donald Trump threatened to slap on Canada and generic drug makers this week will aggravate Americans who were already blaming the tariffs for stubborn inflation ahead of a midterm election dominated by economic issues .

The president has long brandished tariffs as a cudgel in negotiations and some industry insiders see the promise of a future 50 percent tariff on $20 billion of Canadian goods and 100 percent levies on generic drugs as the latest example of a well-worn tactic. The administration is hoping to get Canada to re-negotiate a trade pact and pharmaceutical companies to reshore manufacturing.

But the president’s allies fear that nuance will be lost on voters and argue the new tariffs — which could raise the prices of popular goods like alcohol and bacon, and the heart pills necessary to mitigate their effects — threaten to undercut the long list of victories Republicans would rather be touting.

“Everything that you do that’s not focused on affordability is not helpful. This might not be a negative five, but it’s a negative 0.5. Anything that you’re doing that is not on the plus side of the scale is a problem,” said one person close to the White House, granted anonymity to speak about the impact of the tariffs on the GOP’s midterm chances. “When you announce new tariffs, it’s not like, okay, well, let’s see what they do. It’s, ‘Oh crap, those are the bad things.’”

The threat of new levies — the duties on Canada are not scheduled to take effect until mid-August and the generic duties until 2028 — come as the administration slowly rebuilds its tariff wall in the aftermath of a February Supreme Court ruling that struck down a broad swath of Trump’s trade regime. The president is set to unveil another set of tariffs ranging from 10 to 12.5 percent on 97 countries in the coming days. The administration also has several ongoing investigations that could result in tariffs on everything from wind turbines to industrial machinery.

“I think Republicans are comfortable with the threat, even though that has some market impacts. But actual revenue coming away from people’s pocketbooks is not what Republicans are happy with,” said a second person close to the White House, also granted anonymity to speak about the impact of tariffs on the midterms. “Any conversation about tariffs, unless it’s reducing them, is a bad conversation for Republicans.”

White House aides argue that the tariffs are narrow and targeted and that the long runway before they take effect will blunt their impact on consumers before the midterms. Cost-of-living concerns, they say, are about housing and gas prices, not hockey equipment and alcohol.

“No amount of armchair pontificating will deter the President from standing up for American workers and industries,” said White House spokesman Kush Desai.

The administration has included carve-outs in its proposed tariffs for key products, like energy and groceries, in an effort to blunt some of their economic blow. But those carve-outs could prove the worst of both worlds for the president, said Chad Bown, former chief economist at the State Department in the Biden administration. Voters won’t realize prices could be even higher without the carve-outs and the exemptions on popular products limit the revenue coming into the United States.

“There is a gap between what the general public understands about what’s being applied and the reality,” Bown said. “And in a sense, that could backfire.”

Canadian officials are warning that the new levies, if imposed on Aug. 19, threaten to further tarnish the already damaged American brand and further harm economies in swing states like Maine and Michigan that have deep economic ties with Canada. Even if the two countries are able to reach an agreement that opens the Canadian market to more U.S. goods, Canadians might not purchase them.

“I think we’re getting into an ugly phase,” said Canadian Sen. Peter Boehm, chair of the Canadian Parliament’s Senate Committee on Foreign Affairs and International Trade. “If there are concessions about getting U.S. alcohol back on the shelves … there’s no guarantee that the consumer is going to go out and buy them.”

U.S. Trade Representative Jamieson Greer defended the tariffs on Wednesday in front of the Senate Finance Committee, saying consumers have been spared by businesses that have eaten new tariff costs and that many everyday products, like groceries, have been exempted. There are no tariffs on items the U.S. doesn’t typically produce like coffee, pineapples and mangoes. Other grocery items like lettuce, carrots and broccoli from Canada and Mexico enter the country tariff free, along with the majority of goods from the two countries.

“That’s what Americans care about,” Greer said. “They care about these prices and they’re down.”

Those aren’t the only steps the administration has taken to mitigate the effects of tariffs on consumers. It has also lifted duties on fertilizer to help farmers and has shrunk the list of goods hit by steel and aluminum tariffs.

And even the newest threats have carve-outs. The potential 50 percent tariffs on Canadian goods are aimed at signature products like hockey equipment, alcohol and forestry products — and only cover about $20 billion of the more than $383 billion the U.S. imports from Canada.

Still, Patrick Woodcock, the president and CEO of the Maine Chamber of Commerce, said the tariffs will hit some key goods that cross the northern border, like paper and wood blocks.

“We do not go unscathed from this… there are hundreds of Maine companies that will be reviewing this and assessing its own impact on them today,” Woodcock said. “If this escalates and starts encompassing additional products that would be particularly concerning.”

Trade lawyers close to the administration believe the 30-runway before the tariffs take effect are a clear signal the president is using them as a negotiating chip to get Canada to engage on some of the longstanding unresolved trade issues between the two countries, including dairy pricing and preventing China from gaining a foothold in North America.

It also may persuade Canada to come to the table on discussions over the renewal of the U.S.-Mexico-Canada trade agreement. Negotiations between the U.S. and Mexico have been ongoing since May but the U.S. has locked Canada out of formal conversations.

“The Canadians have been out in the wilderness for a long time,” said Kelly Ann Shaw, who served as one of Trump’s top trade advisers during his first term. “The president has used tariffs for leverage in all sorts of situations, and ultimately the goal would be to not have to impose these tariffs because the underlying issues get resolved.”

After Trump’s threat, Canadian Prime Minister Mark Carney said he had agreed to immediately intensify trade talks — indicating that Trump’s salvo may be working. But even as the two sides negotiate, the underlying stalemate between the two countries remains.

Correction: An earlier version of this report misstated the first name of the president of the Maine Chamber of Commerce. It is Patrick Woodcock.