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President Donald Trump announced a 35 per cent tariff on Canadian exports to the United States, effective August 1.
The new tariff was conveyed in a letter from Trump to Canadian Prime Minister Mark Carney on Thursday, marking the latest in over 20 such letters sent by the US President this week as he continues to pursue aggressive trade policies against numerous economies.
This threat comes despite ongoing trade negotiations between Canada and the US, which were previously aiming for a July 21 deal to salvage the United States-Mexico-Canada Agreement (USMCA). The new tariff effectively shifts that deadline to August 1.
Both Canada and Mexico have been working to find common ground with Trump to ensure the trilateral free trade deal remains on track.
Canada’s Response and Broader Trade War
Canadian Prime Minister Mark Carney responded on the social media platform X, stating, “Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1.”
The USMCA, which replaced NAFTA in July 2020 after Trump’s initial push for renegotiation during his first term, was slated for review by July next year.
However, Trump’s renewed trade war efforts since taking office in January have disrupted this process. Initially, Canadian and Mexican products faced 25 per cent US tariffs, with a lower rate for Canadian energy, as Trump cited concerns over illegal immigration and the flow of illicit drugs, particularly fentanyl, across borders.
Despite Canada contributing less than one per cent of illegal fentanyl to the US supply, according to government data, these measures were implemented. While USMCA exemptions for broad product categories are reportedly set to remain unchanged, the latest tariff on Canada signals heightened tensions.
The letter to Carney came despite what had appeared to be warming relations between the two leaders, marked by a cordial White House meeting in May and discussions at the G7 summit last month, where leaders urged Trump to de-escalate his trade war.
Canada had also agreed to rescind taxes impacting US tech firms, which had previously prompted Trump to call off trade talks.
In a separate development, Trump also told NBC that he is considering imposing blanket tariffs of 15 to 20 per cent on August 1 on countries that have not yet received a specific tariff letter.
Some nations, like Brazil, have already been informed of potential tariff rates as high as 50 per cent unless new terms are agreed upon by August 1.
Trump indicated that a letter to the European Union, the US’s largest trading partner, would be sent “today or tomorrow.”
Brazilian President Luiz Inácio Lula da Silva expressed willingness to negotiate but also reiterated that Brazil is evaluating reciprocity measures.
In his letter to Lula, Trump also criticised the treatment of his right-wing ally, Jair Bolsonaro.
