UPSC Prelims Practice Questions — U.S. imposes 50% import tariffs on $20 bn worth of Canadian products

Q1. With reference to the United States' statutory authorities for imposing import duties, consider the following statements: 1. Unlike Section 232 of the Trade Expansion Act, which requires a prior investigation by the Department of Commerce before the President may act, Section 338 of the Tariff Act of 1930 permits additional duties without any investigation. 2. Action under Section 301 of the Trade Act is initiated and investigated by the Office of the United States Trade Representative, whereas duties under Section 338 are capped at 50 per cent. 3. Duties imposed under Section 338, unlike those under Section 232, must be terminated within 12 months of their imposition. Which of the statements given above is/are correct?

  1. Unlike Section 232 of the Trade Expansion Act, which requires a prior investigation by the Department of Commerce before the President may act, Section 338 of the Tariff Act of 1930 permits additional duties without any investigation.
  2. Action under Section 301 of the Trade Act is initiated and investigated by the Office of the United States Trade Representative, whereas duties under Section 338 are capped at 50 per cent.
  3. Duties imposed under Section 338, unlike those under Section 232, must be terminated within 12 months of their imposition.
  • A. 1 and 3 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. Consider the following statements regarding Section 338 of the U.S. Tariff Act of 1930, invoked in 2026 to impose duties on Canadian goods: 1. It caps the additional duty at 50 per cent. 2. It applies to countries found to place the commerce of the United States at a disadvantage compared with the commerce of any other foreign country. 3. It requires prior Congressional approval before the additional duties can take effect. 4. It prescribes a fixed maximum period after which the additional duties automatically lapse. Which of the statements given above is/are correct?

  1. It caps the additional duty at 50 per cent.
  2. It applies to countries found to place the commerce of the United States at a disadvantage compared with the commerce of any other foreign country.
  3. It requires prior Congressional approval before the additional duties can take effect.
  4. It prescribes a fixed maximum period after which the additional duties automatically lapse.
  • A. 1 and 2
  • B. 2 and 3
  • C. 1, 3 and 4
  • D. 3 and 4 only

Q3. Consider the following statements about the United States–Mexico–Canada Agreement (USMCA) and its predecessor: 1. The USMCA entered into force on 1 July 2020, replacing the North American Free Trade Agreement. 2. The USMCA has a fixed initial term of 16 years and is due to terminate in 2036 unless all three parties confirm that they wish to continue it. 3. The parties committed to hold the first joint review of the agreement on the tenth anniversary of its entry into force. Which of the statements given above is/are correct?

  1. The USMCA entered into force on 1 July 2020, replacing the North American Free Trade Agreement.
  2. The USMCA has a fixed initial term of 16 years and is due to terminate in 2036 unless all three parties confirm that they wish to continue it.
  3. The parties committed to hold the first joint review of the agreement on the tenth anniversary of its entry into force.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. On the United States' side, the conduct of the USMCA joint review, including the domestic consultation process preceding it, is led by which one of the following?

  • A. The Office of the United States Trade Representative, which also administers Section 301 actions
  • B. The Bureau of Industry and Security in the Department of Commerce, which also administers Section 232 actions
  • C. The United States International Trade Commission, an independent agency that makes injury determinations
  • D. U.S. Customs and Border Protection, the agency that collects all import duties without exception

Q5. In the 2026 tariff dispute, Canada's response was coordinated by Dominic LeBlanc, who holds which one of the following portfolios in the Canadian Cabinet?

  • A. Minister responsible for Canada–U.S. trade, who led the negotiations with Washington
  • B. Minister of Foreign Affairs, who heads Global Affairs Canada and its trade commissioner service
  • C. Minister of Finance, who sets the tariff schedules under the Customs Tariff
  • D. Minister of Innovation, Science and Industry, who oversees the automotive and steel sectors

Q6. The 50 per cent U.S. duties on about $20 billion of Canadian goods took effect on 22 August 2026. Canada's matching retaliatory tariffs were announced to take effect from which one of the following dates?

  • A. 25 August 2026
  • B. 1 September 2026
  • C. 8 September 2026
  • D. 1 October 2026

Q7. A free-trade area such as the USMCA allows its members to grant one another tariff concessions that are not extended to all other WTO members. This departure from the most-favoured-nation obligation is permitted by which one of the following provisions of GATT 1994?

  • A. Article I
  • B. Article III
  • C. Article XX
  • D. Article XXIV

Q8. Under the WTO's Dispute Settlement Understanding, the Appellate Body is a standing body of how many persons, and how many of them sit on any one case?

  • A. Seven persons, of whom three sit on any one case
  • B. Seven persons, of whom five sit on any one case
  • C. Nine persons, of whom three sit on any one case
  • D. Five persons, of whom three sit on any one case

Q9. Consider the following statements regarding the change in U.S. tariff treatment of Indian exports under the 2026 India–U.S. trade agreement, as compared with the position before it: 1. Tariffs on Indian exports worth about $30.94 billion were reduced from 50 per cent to 18 per cent. 2. Tariffs on a further tranche of Indian exports worth about $10.03 billion were reduced from 50 per cent to zero. 3. The agreement eliminated U.S. tariffs on the entire range of Indian exports, so that no Indian product category faces a duty higher than that faced by any competing supplier. Which of the statements given above is/are correct?

  1. Tariffs on Indian exports worth about $30.94 billion were reduced from 50 per cent to 18 per cent.
  2. Tariffs on a further tranche of Indian exports worth about $10.03 billion were reduced from 50 per cent to zero.
  3. The agreement eliminated U.S. tariffs on the entire range of Indian exports, so that no Indian product category faces a duty higher than that faced by any competing supplier.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q10. Consider the following statements comparing regional groupings: 1. Unlike the European Union, the USMCA does not establish a common external tariff applicable to imports from non-members. 2. BIMSTEC has seven member states and its Permanent Secretariat is located at Dhaka. 3. The ASEAN Secretariat is located at Bangkok, while BIMSTEC draws five of its members from South Asia and two from South-East Asia. Which of the statements given above is/are correct?

  1. Unlike the European Union, the USMCA does not establish a common external tariff applicable to imports from non-members.
  2. BIMSTEC has seven member states and its Permanent Secretariat is located at Dhaka.
  3. The ASEAN Secretariat is located at Bangkok, while BIMSTEC draws five of its members from South Asia and two from South-East Asia.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q11. Which one of the following was the single largest component of the value of Canada–United States energy trade in 2025?

  • A. Crude oil, accounting for about 69 per cent of the total value traded
  • B. Natural gas, accounting for about 66.6 per cent of the total value traded
  • C. Refined petroleum products, accounting for about 24.5 per cent of the total value traded
  • D. Electricity, accounting for about 5.7 per cent of the total value traded