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Trump Escalates Trade Dispute with Canada with Sweeping 35% Tariff

In a bold and controversial move, former U.S. President Donald Trump announced on Thursday that a new 35% tariff will be imposed on all Canadian imports starting August 1. The decision follows mounting tensions over fentanyl trafficking and Canada’s retaliatory trade measures.

Trump, speaking through a letter published on Truth Social, criticized Canada’s trade policies and accused Prime Minister Mark Carney’s administration of refusing to cooperate with the U.S. on narcotics enforcement. “Instead of working with the United States, Canada retaliated with its own tariffs,” Trump wrote. “If Canada works with me to stop the flow of fentanyl, we will, perhaps, consider an adjustment to this letter.”

The 35% levy will apply in addition to existing sector-specific tariffs. Currently, Canadian steel and aluminum imports already face 50% duties, while vehicles attract 25%. Starting August 1, copper imports will also be hit with a 50% tariff. Trump warned that any further Canadian retaliation will result in an increase to the base 35%, saying, “Whatever the number you choose to raise them by, will be added onto the 35% that we charge.”

Canada Responds: Standing Firm, Citing Progress on Fentanyl

Prime Minister Carney responded swiftly in a post on X, stating that Canada has made “vital progress to stop the scourge of fentanyl in North America” and reaffirmed the country’s commitment to cooperating with U.S. authorities. Carney defended Canada’s stance, saying, “The Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work toward the revised deadline of August 1.”

Despite the growing tensions, Canadian officials remain committed to trade negotiations, which resumed on June 29. The two governments had initially aimed to reach a deal by July 21, with Canada agreeing to retract its proposed digital services tax—a measure that had previously prompted Trump to threaten a complete withdrawal from trade discussions.

Beyond Fentanyl: Trump Cites Trade Deficits and Non-Tariff Barriers

Trump’s letter also emphasized longstanding grievances over what he described as “unsustainable” trade deficits and restrictive non-tariff barriers. “Canada has many Tariff, and Non-Tariff, Policies and Trade Barriers, which cause unsustainable Trade Deficits against the United States. The Trade Deficit is a major threat to our Economy and, indeed, our National Security,” Trump stated.

In an interview with NBC News on the same day, Trump hinted at broader protectionist policies, saying he plans to raise tariffs on most trading partners to between 15% and 20%, up from the current 10%, should he return to office.

Canada’s Countermeasures and Trade Numbers

Canada has not remained passive. In response to earlier U.S. tariffs, Ottawa had imposed its own 25% levy on a range of American goods, including automobiles not in compliance with the United States-Mexico-Canada Agreement (USMCA), along with tariffs on steel, aluminum, electronics, clothing, and various food products. These measures, announced in March, are set to remain until the U.S. lifts its tariffs on Canadian metals.

Trade between the two North American giants is significant. In 2024, total goods trade between the U.S. and Canada reached $761.8 billion, according to the U.S. Census Bureau. The U.S. registered a $62 billion trade deficit with Canada last year. That gap has continued to grow in 2025, with the first five months seeing a 9.8% year-over-year increase, pushing the deficit to $25.6 billion.

Rising Trade Tensions Ahead of Critical Deadline

With the August 1 implementation date looming, the trade standoff between the U.S. and Canada appears to be entering a critical phase. While Trump continues to apply economic pressure, Canada shows no signs of backing down. Whether the two sides can de-escalate before the deadline will likely shape the trajectory of North American trade for years to come.