July 11, 2025
President Donald Trump has announced a sweeping 35% tariff on Canadian imports, effective August 1, intensifying trade tensions with the U.S.’s northern neighbour. The decision, shared via social media and in a formal letter to Canadian Prime Minister Mark Carney, is part of a broader tariff strategy targeting over 20 countries. Trump cited “financial retaliation” by Canada as justification and warned that any countermeasures would result in even higher tariffs. However, goods that comply with the U.S.-Mexico-Canada Agreement (USMCA) will be temporarily exempt—though the White House has indicated this could change.
This tariff hike raises the previous 25% rate on non-USMCA goods and comes amid ongoing negotiations between the two countries, which had aimed to reduce tariffs before a self-imposed July 21 deadline. Carney, who has maintained a more diplomatic tone with Trump than his predecessor Justin Trudeau, expressed optimism about reaching a deal by August 1. Still, Trump’s letter included pointed criticisms of Canada’s dairy import restrictions and its role in fentanyl trafficking into the U.S., suggesting that cooperation on these issues could influence future tariff decisions.
In response, Canada has pledged nearly $1 billion to enhance border security and appointed a “border czar” to address U.S. concerns. Carney emphasized Canada’s progress in curbing fentanyl trafficking and reiterated his commitment to working with the U.S. to protect both nations’ communities.
Beyond Canada, Trump is considering blanket tariffs of 15% to 20% on most trading partners, up from the current 10%. Brazil has been hit with a 50% tariff, while Vietnam faces a 20% rate and an additional 40% penalty on transhipped goods. The European Union is negotiating to limit its exposure to a 10% universal tariff, seeking exemptions for key sectors. Trump has also imposed a 50% duty on copper imports, which could impact industries reliant on power grids, military hardware, and data infrastructure.
Canada, under Carney’s leadership since April, has responded by distancing itself from the U.S. and strengthening ties with the EU and UK. Carney has emphasized Canada’s independence and reliability as a trade partner, while signaling a preference for long-term negotiations over short-term concessions.
The Canadian economy, heavily reliant on U.S. trade—which accounts for about one-fifth of its output—is already feeling the strain. Unemployment has risen to a nine-year high (excluding the pandemic), and domestic demand is weakening. Analysts warn that a fully tariff-free trade relationship with the U.S. is unlikely under the current administration. Financial markets have reacted cautiously, with the Canadian dollar initially falling before stabilizing. While some traders remain skeptical that Trump will follow through on his threats, experts caution that this may be a risky assumption.
Source: (WSJ)
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