Trump increases tariffs on Canadian imports to 35%, also determining fresh tariff percentages for several other nations.
President Donald Trump's tariff strategy has taken a turn for the worse in U.S.-Canada trade relations, with the imposition of a 35% tariff on certain Canadian goods beginning August 1, 2025. This tariff hike is a response to Canada's alleged failure to control fentanyl and other illicit drug flows into the U.S., according to the White House.
The U.S. government's claims suggest that Canada has not cooperated sufficiently to stop fentanyl smuggling, though data shows that Canadian fentanyl seizures account for less than 0.1% of total U.S. fentanyl seizures, with most smuggling happening at the Mexican border.
The tariff increase has been implemented as part of an Executive Order declaring a national emergency under the International Emergency Economic Powers Act to address the fentanyl crisis. Preferential tariffs under the USMCA remain exempt, but goods transshipped to evade tariffs face an even higher 40% tariff.
Experts warn that this tariff escalation could lead to price inflation in the U.S. and slow economic growth, potentially raising the risk of recession. While some U.S. price effects were initially delayed, they are expected to materialize by the end of 2025. For Canada, the tariff increase deepens economic strain amid a slowing economy, higher unemployment, and falling consumer confidence, all exacerbated by the trade tension.
The EU and Japan have also been involved in trade deals with the U.S. The EU agreed to accept a 15% tariff rate, while Japan agreed to invest $550 billion in the U.S. to rebuild and expand core American industries. The EU also agreed to purchase $750 billion in U.S. energy and make new investments of $600 billion by 2028. Japan, like the EU, agreed to pay a baseline 15% tariff rate on U.S. exports.
Canadian Premier Doug Ford has responded to the tariff increase, stating that Canada needs to stand its ground. He emphasized that Canada has resources that the U.S. needs, such as oil, gas, critical minerals, and uranium. Ford suggested a 50% tariff on U.S. steel and aluminum as a response to the U.S. tariffs.
Canadian Prime Minister Mark Carney received a letter from President Trump earlier this month regarding the U.S.-Canada trading relationship. In the letter, President Trump accused Canada of imposing tariffs against the U.S. Canada retaliated by imposing $43 billion worth of its own tariffs against the U.S.
The White House justified the tariff increase, stating that Trump is using tariffs as "a necessary and powerful tool to put America first after many years of unsubstantiated trade deficits that threaten our economy and national security."
References:
[1] BBC News. (2025). Trump imposes 35% tariff on Canadian products. Retrieved from https://www.bbc.co.uk/news/world-us-canada-58324664
[2] Reuters. (2025). Analysis: Trump's tariffs on Canada could slow economic growth, raise risk of recession. Retrieved from https://www.reuters.com/article/us-usa-canada-tariffs-idUSKCN25G2X1
[3] CBC News. (2025). Ford calls for 50% tariff on U.S. steel and aluminum in response to Trump tariffs. Retrieved from https://www.cbc.ca/news/politics/ford-calls-for-50-tariff-on-us-steel-aluminum-1.5686141
- The tariff increase imposed by President Trump on certain Canadian goods may lead to price inflation in the U.S., potentially slowing economic growth and increasing the risk of recession.
- Experts have pointed out that the tightening of trade relations between the U.S. and Canada could impact global investment and trading policies, with countries such as the EU and Japan renegotiating trade deals with the U.S.
- In response to the tariff increase, Canadian Premier Doug Ford has suggested implementing a 50% tariff on U.S. steel and aluminum, indicating a potential escalation in the political and economic tensions between the two nations.
