WashingtonIn a letter on Thursday, President Donald Trump said that he will increase tariffs on Canadian imports to 35%, further escalating a rift that has dealt a crippling blow to their long-standing partnership.
Following months of warnings, Trump aggressively raised the highest 25% tariff rates in his letter to Canadian Prime Minister Mark Carney. Though he has voiced his displeasure with a trade deficit with Canada that is primarily a result of American oil purchases, Trump’s tariffs were purportedly an attempt to get Canada to crack down on fentanyl smuggling despite the comparatively low level of drug trafficking.
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Trump stated that the flow of fentanyl is not the only issue we face with Canada, which has several trade barriers, tariffs, and non-tariff policies.
Since recent rises in the S&P 500 stock index indicate that many investors believe Trump would eventually back down on the increases, the higher rates, which would take effect on August 1, would create a nervous few weeks for the global economy.
Canada, America’s second-largest trading partner after Mexico, has become somewhat of a counterbalance to Trump, despite the fact that several other nations have received tariff letters this week. In response to the president’s insults about Canada being the 51st state, it has put retaliatory tariffs on U.S. exports. Although Mexico has also been subject to 25% tariffs due to fentanyl, it has not experienced the same kind of public pressure from Trump.
in April on the claim that Canadians ought to maintain their composure. In response, he has distanced Canada from its complex relationship with the United States in an effort to fortify ties with the United Kingdom and the European Union.
Carney shared a photo of himself with British Prime Minister Keir Starmer on X only hours before Trump’s letter, writing, “The world is turning to reliable economic partners like Canada in the face of global trade challenges.” He implied that Trump’s chaotic tariff policy, which has involved strong threats and reversals, had made the United States untrustworthy.
The public part of their encounter was friendly at the time. However, Trump said that the Canadian leader could not instruct him to lift the tariffs.
At the moment, Trump stated, “Just the way it is.”
Carney said he would be open to pursue trade negotiations with patience.
The Canadian leader stated that much larger forces are at play. Additionally, this will require some debate and time.
To date, Trump has issued a number of tariff letters to 23 nations. In addition to a Wednesday note that called for the ongoing trial of its former president, Jair Bolsonaro, for attempting to remain in power following his 2022 electoral defeat, those formal letters were more intimate with Canada. Trump’s attempts to avenge his 2020 election defeat led to a similar indictment.
Trump’s failure to complete the dozens of trade deals he said would be simple to negotiate is reflected in the letters. A 90-day negotiating period during which a 10% baseline tariff would be applied to the majority of imported goods was announced by Trump shortly after he unveiled his April 2 Liberation Day tariffs due to a selloff in the financial markets.
However, as he resets the tariffs with his letters, Trump has signaled that the 10% tariff rates are essentially going away.
In a phone interview with NBC News, Trump stated, “We’re just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%.”
In order to facilitate further trade negotiations, Trump has so far declared trade frameworks with the United Kingdom, Vietnam, and China in addition to a standalone agreement with China. Trump increased import duties on Chinese goods to 145%, however following discussions, he has stated
Trump announced in June that he was halting trade negotiations with Canada due to its intentions to target American IT firms. After Carney revoked the tax a few days later, negotiations resumed.
How the new tariffs would affect the 2020 United States Mexico Canada Agreement, which Trump negotiated, was not made apparent in his letter on Thursday. Eligible items have been safeguarded by the USMCA under the present tariff structure. However, a 2026 review of the agreement is planned.
