Key Takeaways
• Higher Canadian Tariffs: President Trump has announced a 35% blanket tariff on all Canadian imports starting August 1.
• Drug Enforcement: The U.S. administration is linking trade penalties to Canada’s role in curbing the cross-border flow of illegal drugs, particularly fentanyl.
• Balancing Act: With trade negotiations ongoing, Canada is pushing for full tariff removal, while the U.S. threatens further increases if Canada retaliates.
Tariff wrangling between Canada and the U.S. continues.
In a letter addressed to Canadian Prime Minister Mark Carney, U.S. President Donald Trump announced that he will impose a 35% blanket tariff on all Canadian goods starting Aug. 1 as part of his ongoing reciprocal tariff push, citing what he called “Canada’s failure to stop drugs from pouring into our country.” These tariffs would be in addition to the 50% tariffs levied on all steel and aluminum imports coming into the U.S., including those from Canada.
The two governments have been negotiating in recent weeks to reach a lasting trade and border security deal. Canada has said it wants all tariffs removed, which Trump has not indicated he’s willing to do.
The cross-border flow of illegal substances has been a primary rationale for many of the tariffs Trump has imposed on Canada and Mexico in recent months. Despite Canada making the case that it’s not a significant source of U.S.-bound fentanyl – and U.S. Customs and Border Protection data bearing that out – former Prime Minister Justin Trudeau appointed Kevin Brosseau as “Fentanyl Czar” in December, who currently leads efforts to disrupt production and cross-border trade, and announced a $950 million border security plan.
If Canada retaliates as part of this latest salvo, wrote Trump this week, then the tariffs implemented on Canadian goods will have that same retaliatory rate added on to the 35% come Aug. 1.
“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” wrote Carney on X in response to Trump’s latest missive. “We will continue to do so as we work towards the revised deadline of Aug. 1. Canada has made vital progress to stop the scourge of fentanyl in North America. We are committed to continuing to work with the United States to save lives and protect communities in both our countries.”
Since the spring, Trump has also implemented a 25% tariff on Canadian vehicles, with exceptions made for U.S. parts, and has also announced 50% levies on all copper and 200% duties on pharmaceuticals, effective Aug. 1. Canada is a significant exporter of both metals and pharma products to the U.S.
This week, the president postponed the enforcement of reciprocal tariffs (originally scheduled to end on July 8) until August 1. In the meantime, letters have been sent to several countries outlining updated tariff rates that will take effect if no trade agreement is reached with the United States by that date.
