Why has Trump hit Canada with a 35 percent trade tariff?

United States President Donald Trump has announced that helium volition rise import tariffs connected astir Canadian goods to 35 percent, adjacent though Canada has agreed to rescind its planned digital services tax arsenic the US demanded.

This comes arsenic Trump sends “tariff letters” to a big of countries this week, notifying them of planned US commercialized levies to instrumentality effect connected August 1 if commercialized deals are not struck earlier then.

What has Trump announced for Canada?

In precocious June, Trump threatened to end commercialized talks with Canada implicit its plans to propulsion up with a caller integer services tax, which would deed US exertion companies financially. The US president said it was “a nonstop and blatant onslaught connected our Country”. Canada rapidly agreed to retreat the tax.

But, successful a missive released connected his societal media level connected Thursday this week, Trump nevertheless told Canadian Prime Minister Mark Carney that a caller 35 percent tariff – an summation from the 25 percent complaint primitively imposed successful March – would spell into effect connected August 1 and would emergence if Canada retaliated with caller tariffs of its own.

What bash the US and Canada trade?

Canada is America’s second-largest trading partner, aft Mexico. In 2024, Canada bought $349.4bn of US goods and exported $412.7bn, according to US Census Bureau data. The upshot is that Canada runs a $63.3bn commercialized surplus with the US.

Canada’s cardinal exports to the US see lipid and mineral fuels, cars and car parts, arsenic good arsenic concern machinery and atomic reactors. On the different hand, it imports ample amounts of proscription equipment, concern chemicals and manufacturing exertion from the US.

US President Donald Trump and Canada’s Prime Minister Mark Carney speech during the G7 Summit successful Kananaskis, Alberta, Canada, connected June 16, 2025 [Amber Bracken/Reuters]

What US tariffs does Canada already face?

In his inaugural code aft taking implicit the US presidency connected January 20, Trump announced a 25 percent tariff connected each Canadian goods and a 10 percent tariff connected Canadian vigor resources, claiming that Canada had a “growing footprint” successful the accumulation of fentanyl, a highly addictive and often deadly opioid drug.

He claimed Canada was not doing capable to forestall the travel of fentanyl into the US.

Those tariffs were paused for 30 days pursuing assurances from Canada that due enactment would beryllium taken to curb the travel of fentanyl, but were past reimposed successful aboriginal March aft Trump declared that Canada had failed to bash enough. They are present rising again, to 35 percent.

Canada, the biggest overseas supplier of alloy and aluminium to the US, was besides severely deed by Trump’s abstracted 25 percent tariffs connected alloy and aluminium, which helium imposed globally successful March. Trump doubled that for each countries to 50 percent successful June, saying the measurement would support and bolster the US metals sector.

In March, Trump besides announced a abstracted 25 percent tariff connected imported cars and car parts. He said this would “take back” wealth from overseas countries that person been “taking our jobs” and “our wealth”.

Sectoral tariffs, connected things similar cars and concern metals, are abstracted from country-wide levies.

For his part, Canadian Prime Minister Mark Carney described the car taxation determination arsenic a “direct attack” connected Canadian workers.

Until the commencement of Trump’s 2nd word arsenic US president successful January this year, Canada had enjoyed years of escaped commercialized relations with the US. It is understood that Mark Carney is inactive trying to find ways to fulfill Trump truthful that a 2018 free-trade deal betwixt the US, Mexico and Canada (USMCA) – agreed during Trump’s archetypal word successful bureau – tin beryllium enactment backmost connected track.

USMCA came into unit connected July 1, 2020, replacing the 1994 North American Free Trade Agreement (NAFTA). It is expected to beryllium reviewed each six years, and since Trump returned to office, it has been blighted by disputes and non-compliance issues. Some commercialized commentators person suggested the statement won’t beryllium extended adjacent summer.

Trump’s Canada announcement this week besides came aft officials successful Ottawa denounced yet different abstracted US program to enforce a 50 percent import tariff connected copper earlier this week. Canada is 1 of the largest suppliers of the metallic to the United States.

Why is Trump levying each these tariffs connected Canada?

The Trump medication claims its tariffs connected Canada are designed to unit Ottawa to ace down connected fentanyl smuggling into the US, contempt lone a humble travel of the cause implicit the border. Trump has besides expressed vexation with his country’s commercialized shortage with Canada, which mostly reflects lipid purchases.

“I indispensable notation that the travel of Fentanyl is hardly the lone situation we person with Canada, which has galore Tariff, and Non-Tariff, Policies and Trade Barriers,” Trump wrote successful the letter.

Besides much than 20 akin letters to different US commercialized partners truthful acold this week, Trump says helium volition soon denote caller tariffs for the European Union, too. As with Canada’s letter, Trump has promised to instrumentality these caller import levies from August 1.

Do Trump’s justifications for tariffs connected Canada clasp water?

Canadian authorities information shows that less than 0.1 percent of each seizures of fentanyl entering the US, from 2022-2024, were made astatine the Canadian border.

Almost each of remainder was confiscated astatine the US borderline with Mexico. Carney has besides publically committed to “stop the scourge of fentanyl” successful North America, and said his authorities wants to enactment alongside the US to support communities successful some countries.

Throughout the existent commercialized negotiations with the United States, the Canadian authorities has steadfastly defended our workers and businesses. We volition proceed to bash truthful arsenic we enactment towards the revised deadline of August 1.

Canada has made captious advancement to halt the scourge…

— Mark Carney (@MarkJCarney) July 11, 2025

Instead, successful his archetypal code arsenic premier minister, Carney said helium believed that “the Americans privation our resources, our water, our land, our country”.

He has had to propulsion backmost connected Trump’s taunts of making Canada the “51st authorities of America”. Indeed, Carney predicated his caller election win connected the thought that Canada should support its “elbows up”, arsenic helium enactment it.

During a gathering with Trump astatine the White House successful Washington, DC, successful May, Carney said: “Having met with the owners of Canada implicit the people of the run these past respective months, it’s not for merchantability – won’t beryllium for merchantability – ever.”

In caller months, Carney has besides been strengthening ties with the United Kingdom and the EU successful a bid to diversify its exports from the US.

Hours earlier Trump’s latest letter, Carney posted a picture of himself with British Prime Minister Keir Starmer connected X, saying, “In the look of planetary commercialized challenges, the satellite is turning to reliable economical partners similar Canada.”

In the look of planetary commercialized challenges, the satellite is turning to reliable economical partners similar Canada. pic.twitter.com/KlsXJdhCSk

— Mark Carney (@MarkJCarney) July 10, 2025

What was the Canadian integer taxation enactment about?

The US is location to immoderate of the world’s biggest exertion companies, including Apple, Alphabet/Google, Amazon and Meta. A caller 3 percent integer services taxation to beryllium levied connected tech companies deriving revenues from Canadian users, owed to instrumentality effect successful precocious June this year, could person outgo those companies $2bn successful further taxes.

Trump called the caller taxation “a nonstop and blatant onslaught connected our Country” successful a Truth Social station successful June. He added that the US would beryllium “terminating ALL discussions connected Trade with Canada, effectual immediately”.

A fewer days aft Trump suspended commercialized negotiations, Carney rescinded the taxation successful an effort to resume talks.

As such, Trump’s latest tariff missive to Carney has travel successful spite of what galore had seen arsenic a thawing of relations betwixt the 2 leaders, who stay locked successful commercialized negotiations.

How has Trump treated different countries?

So acold this week, Trump has sent tariff letters to 23 heads of state, notifying them of caller commercialized tariffs. On Wednesday, helium told Brazil that helium plans to enforce a 50 percent tariff due to the fact that of its “witch-hunt” against erstwhile President Jair Bolsonaro.

Bolsonaro, who is accused of plotting a coup, refused to publically concede the 2022 presidential election, which helium mislaid to existent President Luiz Inacio “Lula” da Silva. Trump was likewise indicted successful narration to efforts to overturn his ain predetermination nonaccomplishment successful 2020.

Elsewhere, Trump’s tariff letters bespeak his administration’s nonaccomplishment to finalise dozens of commercialized agreements that helium claimed would beryllium casual to negotiate. Shortly aft unveiling his April 2 “Liberation Day” commercialized levies, Trump announced a 90-day pause to effort and enactment retired these agreements.

But connected Monday, the president was forced to widen this intermission again until August 1. For the astir part, Trump says helium is trying to rebalance ample trading deficits, whereby the US imports much than it exports. However, immoderate targeted countries – including Brazil – person commercialized imbalances successful the US’s favour alternatively than their own.

Other than Brazil, recipients of tariff letters connected Wednesday included the Philippines, Moldova, Sri Lanka, Brunei, Libya, Algeria and Iraq. They were notified of tariffs arsenic precocious arsenic 30 percent.

The rates Trump said would beryllium imposed connected Sri Lanka, Moldova, Iraq and Libya were little than those helium initially announced successful aboriginal April. Tariffs connected goods from the Philippines and Brunei were higher. The complaint for goods from Algeria remained the same.

On Monday, helium notified Japan, South Korea and a twelve different economies of tariffs ranging from 25 percent to 40 percent.

In an interrogation with NBC News connected Thursday, Trump said: “We’re conscionable going to accidental each of the remaining countries are going to pay, whether it’s 20 percent oregon 15 percent. We’ll enactment that retired now.”

Currently, the planetary baseline minimum tariff complaint for astir each US trading partners is 10 percent.

How person markets reacted to the tariff letters?

While the White House unfurled a watercourse of tariff announcements this week, fiscal markets person mostly shrugged disconnected Trump’s threats. The S&P 500 – the banal marketplace scale tracking the show of the 500 largest companies successful the US – and the tech-heavy Nasdaq Composite some closed astatine grounds highs connected Thursday.

Experts accidental that caller gains successful the S&P 500 suggest galore investors deliberation that Trump volition yet backmost down connected his tariff increases.

Financiers person established a sanction for the president’s argumentation flip-flopping – it’s called TACO: “Trump Always Chickens Out”. Washington, truthful the mentation goes, does not person a precocious tolerance for economical unit and volition backmost disconnected erstwhile tariffs origin pain.