U.S. President Donald Trump declared on July 10–11, 2025, that the United States will apply a 35% tax on all Canadian goods imported into the U.S. beginning August 1, 2025. This is a significant increase over the present 25% rate that was implemented in February. With these actions, trade tensions between the United States and Canada have significantly increased.
Trump cited Canada’s alleged failure to control fentanyl trafficking into the U.S., despite border data showing minimal fentanyl flow from Canada, as the key justification. He also criticized Canadian trade barriers—especially extreme dairy tariffs of up to 400%—and blamed them for an “unsustainable” trade deficit with the U.S.
📄 Letter to Prime Minister Carney
In a letter addressed to Canadian Prime Minister Mark Carney and posted on his platform Truth Social, Trump laid out several conditions:
Manufacturing Shift Exemption: No tariffs would apply if Canadian companies move production to the U.S.; the White House promised expedited approvals for these relocations, possibly within “weeks”
Retaliation Clause: Any tariffs Canada imposes on U.S. goods would be added on top of the 35% tariff
Negotiation Leverage: Trump suggested the tariffs could be adjusted—up or down—depending on Canadian cooperation, especially regarding stopping fentanyl smuggling
🌍 Broader Tariff Strategy
This announcement is part of a larger wave of tariff escalation: since late April, Trump has dispatched over 20 letters to countries including Japan, South Korea, and Brazil, warning of similar tariff hikes. He hinted at potential blanket tariffs of 15–20% for many nations and a 50% tariff on copper imports from Brazil
Major markets reacted swiftly: U.S. and European equity futures sank almost 1%, while the U.S. dollar modestly increased. As investors braced for potential worldwide economic consequences, the price of gold and oil increased.
🇨🇦 Canada’s Response
Canadian Prime Minister Carney responded via X (formerly Twitter), affirming that Canada remains committed to defending its workers and businesses while continuing negotiations toward a revised economic and security deal by July 21
He also asserted that Canada is actively combating fentanyl trafficking, noting that only a tiny fraction of the illicit drug seized at U.S. borders originates from Canada — a statistic that casts doubt on the administration’s justification for the tariffs
In response to prior U.S. tariffs imposed in March, Canada had already retaliated with duties on up to $43 billion in U.S. goods and enacted countermeasures to defend domestic industries
⚠️ What This Means
Exemptions may continue for goods compliant with the USMCA, though details about whether these exemptions will carry over under the new 35% have not been clarified
If Canada retaliates, tariffs could climb above 35%, compounding economic disruption on both sides.
The tariff deadline—August 1—marks a critical negotiation window for Canada to strike a deal that could mitigate or reverse these sweeping duties.
