President Trump intensified his tariff threats against Canada on Thursday, proposing a steep 35 percent levy on Canadian imports. This move significantly complicates ongoing negotiations that Canadian representatives had hoped would lead to a swift trade agreement. Trump justified his latest proposal by reviving discredited claims regarding fentanyl entering the U.S. from Canada.
Mr. Trump publicized his latest threat in a letter to Prime Minister Mark Carney of Canada, shared across social media. The letter stated that the new, higher tariff rate for Canada would take effect on August 1. However, the scope of its application — whether it would impact all Canadian goods or if the threat would fully materialize — remains unclear. Mr. Carney's office has not yet responded to inquiries regarding Mr. Trump's letter.
While the letter to Canada mirrored the format of correspondence Mr. Trump has sent to nearly two dozen American trading partners this week, it diverged by specifically accusing Canada of "financially retaliating" against the United States with its own tariffs. It also reiterated Mr. Trump’s persistent — and unsupported by American and Canadian data — assertion that Canada has not done enough to curb the flow of fentanyl across the U.S.-Canada border. His long-standing complaints about Canada's high tariffs on U.S. dairy farmers were also included.
Significantly, Mr. Trump also hinted that the new tariffs are open to further negotiation before the August 1 deadline. "These Tariffs may be modified, upward or downward, depending on our relationship with your Country," Mr. Trump concluded, leaving a slim window for potential adjustments.
A widespread application of 35 percent tariffs could severely damage Canada's export-dependent economy. Canada relies heavily on the United States as its largest trading partner, making such tariffs a significant economic blow.
Earlier this year, Mr. Trump imposed a 25 percent tariff on Canadian imports. However, he later exempted most products that qualify as North American under the U.S.-Mexico-Canada Agreement (USMCA), the trade pact signed during his first term. Exceptions included steel and aluminum, which currently face a 50 percent charge, and vehicles, where the tariff considers American components. Additionally, Mr. Trump set a lower tariff rate for Canadian oil, fertilizer, and energy products.