Increased Trade Tensions: Trump Imposes 35% Tariffs on Canadian Goods
The Trump administration has implemented a new tariff on Canadian goods, making it more aggressive as part of the president's trade program. The new tariff, which took effect at 00:01 EST on August 1st, has increased the rate from 25% to 35% for goods not covered by USMCA.
The move could complicate negotiations not only with Canada but also with other countries affected by this wave of tariffs. The administration places great emphasis on trade deficits and industry influence in its rhetoric, presenting tariffs as a negotiating tool to correct imbalances in trade and revitalize the US manufacturing industry.
However, the Canadian government, represented by Prime Minister Mark Carney, has emphasized continuing negotiations with the US while focusing internally on controllable factors. As of August 1, 2025, trade negotiations between the two countries are ongoing with no final resolution reported yet regarding increased tariffs on Canadian goods.
Regarding tariffs, recent U.S. executive actions have aimed at preventing tariff "stacking"—meaning goods subject to certain Section 232 tariffs on automobiles or parts are not subjected to overlapping tariffs on Canadian- or Mexican-origin goods or aluminum and steel products. This applies retroactively from March 4, 2025, and refunds are being processed accordingly. However, there has been no indication that these measures eliminate or reduce all tariffs on Canadian goods.
No specific announcement about increased tariffs on Canadian goods or retaliatory Canadian tariffs toward the US has been made public by these dates. The situation appears to be one of ongoing negotiation without new unilateral tariff hikes immediately effective. Public consultations on new Section 232 investigations related to other products continue but do not specifically address Canadian goods tariffs as of the latest updates.
In a broader strategy affecting 69 countries, all threatened with severe sanctions unless new trade deals are established, the new tariff is a part of a strategy that could have far-reaching implications. The new tariff is a response to Canada's failure to control Fentanyl flows and its agricultural tariff policies towards the US.
Meanwhile, markets showed a moderate reaction in the five hours following the announcement of the increased tariff on Canadian goods. Asian stock futures fell but had no major impact due to the tariff announcement. The administration plans to clarify the "rules of origin" for Canadian products soon.
The new decree is also aimed at putting an end to tariff evasion and indicates that more stringent enforcement measures could be implemented later. The regulation includes a 40% tax on products transferred via third countries to avoid paying duties. The Trump administration relies on the International Emergency Economic Powers Act to justify the imposition of new duties.
The administration has also granted a temporary reprieve to Mexico, with an additional 90-day delay to avoid a potential 30% increase on goods not covered by USMCA. The aim of the new decree is to maintain a balance between trade negotiations and enforcement of tariffs.
As the negotiations continue, both countries are under pressure to find a resolution that benefits both economies. The potential deadline for a new trade arrangement with Beijing, as mentioned by Trump, could also impact the ongoing negotiations between the US and Canada. The situation remains fluid, with ongoing negotiations and potential changes in the near future.
- The new tariff on Canadian goods, implemented as part of the Trump administration's aggressive trade policy, could have far-reaching implications in the context of war-and-conflicts and politics, especially considering the administration's ongoing threats of severe sanctions against 69 countries.
- The ongoing trade negotiations between the US and Canada, complicated by the new tariff on Canadian goods, are not only about policy-and-legislation and general-news, but also about finding a resolution that benefits both economies while maintaining a balance in trade, as highlighted by the administration's plans to clarify the "rules of origin" for Canadian products and its temporary reprieve for Mexico.
