President Donald Trump announced a 35% tariff on all goods imported from Canada, plunging already shaky relations between the two countries into deeper uncertainty just as Prime Minister Mark Carney pursues a new trade deal.Trump revealed the new tariff in a letter to Carney on Thursday. The tariff takes effect on August 1. This sudden move throws a major obstacle in front of Carney’s efforts to negotiate a new economic partnership with the United States. There was a July 21 deadline for those trade talks.."Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses," Carney posted to Twitter/X on Thursday evening. “We will continue to do so as we work towards the revised deadline of August 1.”.Carney did not specify what this revised deadline meant for the negotiations.“It was well received … we’ll see what happens,” Trump said at the White House this morning.Trump’s announcement is the latest twist in a year filled with tariff threats, delays, and reversals causing global trade issues. Earlier this week, Trump threatened tariffs between 25% and 40% on imports from 14 other nations, including Japan and South Korea..Few countries are more impacted by the US tariffs than Canada. Canada sends over three-quarters of its exports south of the border. Since returning to the White House, Trump has repeatedly targeted Canada.Trump imposed several rounds of tariffs and even threatened to use "economic force" to annex the country.Previously, Trump announced a 25% tariff on Canadian and Mexican goods in February, which took effect in March. Some goods covered under the old United States-Mexico-Canada Agreement (USMCA) were later exempted. .Canadian energy and potash faced a lower 10% tariff.Trump’s Thursday letter did not clarify if those earlier exemptions would remain under the new 35% rate. However, White House officials told the Wall Street Journal and Bloomberg that the USMCA exemptions would remain in place under the new 35% tariffs.This new tariff is separate from other US tariffs already imposed or threatened on specific Canadian sectors like automobiles, copper, steel, and aluminum. Trump warned that if Canada retaliates with new tariffs on US goods, the US will add that amount “on top” of the 35% rate.Canada has previously imposed retaliatory tariffs on many US products, though it later removed some. Last month, Carney indicated he could adjust counter-tariffs on US steel and aluminum based on progress in talks. .Carney left the door open to further retaliation.Trump repeated his claim that tariffs on Canada are necessary to combat the flow of fentanyl into the US. The evidence suggests very little fentanyl enters across the Canada-US border. US Customs and Border Protection data shows less than 1% of fentanyl seized at or near US land borders in the 2024 fiscal year originated in Canada.Canada has taken steps to address US concerns about fentanyl, while stressing it is not a major source. In December, the government announced a nearly $950 million plan to boost border security. .This year, it appointed a "Fentanyl Czar." Canadian officials say they are unsure what more the Trump administration expects."Canada has made vital progress to stop the scourge of fentanyl in North America," said Carney. "We are committed to continuing to work with the United States to save lives and protect communities in both our countries."Trump has offered other, sometimes conflicting, reasons for targeting Canada. These include the US trade deficit with Canada, which he often exaggerates by over $100 billion, and Canada’s system for managing dairy supply. .His letter to Carney mentioned both issues.Late last month, Canada scrapped a planned tax on large digital services companies like Apple and Meta. This followed Trump labelling the tax a "blatant attack" on the US and threatening to abandon trade talks.Carney campaigned as the best person to manage the turbulent relationship with Trump, fueled by tariffs and annexation threats. .Carney promised an "elbows up" approach.Recently, however, Carney has adopted a less confrontational tone with Trump. He has occasionally used flattery in an attempt to ease tensions and get existing tariffs removed. The new 35% tariff presents his most significant challenge yet.
