In a significant escalation of trade tensions, U.S. President Donald Trump announced a hefty 35% tariff on Canadian imports, effective August 1. This comes after raising current tariffs from 25% to 35%, targeting a wide range of goods beyond steel, aluminum, and auto parts .
Trump cited Canada’s alleged non-cooperation in tackling fentanyl trafficking and its trade barriers—especially those affecting U.S. dairy farmers—as key reasons behind this decision. He warned that if Canada retaliates, the tariffs could be increased further . Canada has maintained that fentanyl smuggling from its side is minimal and has taken measures to curb it .
At the same time, Trump hinted at plans to introduce blanket tariffs of 15–20% on other major trading partners, including the EU, Japan, and South Korea, reflecting his ongoing trade strategy . He’s already slapped a 50% tariff on copper and signaled more tariffs may follow .
Market response was swift: the Canadian dollar fell by over 0.5%, while the U.S. dollar strengthened as global investors reacted to increased trade volatility . Futures in U.S. and European markets also moved lower amid concerns of a widening trade war ).
Canada’s Prime Minister Mark Carney remains confident, aiming to finalize a new economic and security pact by July 21, while defending Canadian interests . However, the looming tariffs add pressure to ongoing negotiations and cast uncertainty on future U.S.–Canada trade cooperation.