In a dramatic escalation of trade tensions, former U.S. President Donald Trump announced a 35% tariff on Canadian imports—up from the current 25%—set to take effect August 1, warning of further hikes if Ottawa retaliates.
The move deals a blow to Prime Minister Mark Carney’s efforts to secure a new trade pact with Washington and signals a broader protectionist push, with Trump also planning blanket tariffs of 15-20% on most other trading partners.
In a letter posted on his social media platform, Trump accused Canada of failing to curb fentanyl flows and maintaining unfair trade barriers harming U.S. dairy farmers, framing the trade deficit as a national security threat. “If Canada works with me to stop the flow of Fentanyl, we may reconsider,” he wrote. Canadian officials pushed back, noting minimal fentanyl originates from their borders but reaffirming cooperation with the U.S. to combat the crisis.
While goods under the USMCA trade pact are expected to remain exempt, and energy/fertilizer tariffs unchanged, the decision rattled markets. U.S. and European stock futures dipped in Asia amid fears of a wider trade war, particularly as Trump prepares to announce EU tariffs later Friday. Analysts warn a repeat of the U.S.-China trade war’s volatility could destabilize global markets.
The tariff offensive extends beyond Canada: Trump has recently targeted Japan, South Korea, and copper imports (50%), with Myanmar’s junta now pleading for relief from 40% U.S. duties. The Philippines also plans to discuss its 20% tariff in upcoming talks.
Carney, who campaigned on repairing U.S.-Canada trade ties, faces mounting pressure as his July 21 negotiation deadline looms. Trump’s letter ambiguously noted tariffs could “be modified, upward or downward,” leaving Ottawa in limbo. The standoff recalls last month’s collapse of talks after Canada axed a digital tax opposed by Trump.
With the U.S. as Canada’s top export market ($412.7B in 2023) and largest buyer of U.S. goods ($349.4B), the confrontation risks severe economic fallout. As Trump vows to “set tariffs” unilaterally, allies brace for a turbulent new phase in global trade.
