President Donald Trump has announced a sharp escalation in trade tensions with Canada, stating he will raise tariffs on many Canadian imports to 35% beginning Aug. 1. The move builds on previous 25% tariffs first introduced in March and is expected to strain economic ties between the two countries, which have long maintained a close trading relationship under the United States-Mexico-Canada Agreement (USMCA).
The tariff increase was outlined in a formal letter to Canadian Prime Minister Mark Carney, citing unresolved issues such as fentanyl trafficking, Canada’s tariff barriers, and a growing trade deficit.
Canada, America’s second-largest trading partner, has responded by reiterating its commitment to securing a revised trade agreement. Prime Minister Carney has positioned his government as a staunch defender of Canadian businesses and workers and has sought to diversify trade ties by strengthening relationships with the European Union and United Kingdom.
Trump’s latest tariff decision follows a wave of similar actions against other countries, including Mexico and Brazil. His tariff strategy has roiled global markets, raising investor concerns despite earlier gains in major indices like the S&P 500. Early signs of market unease emerged again on Friday, as futures fell in response to the latest developments.
While the USMCA currently shields many goods from added tariffs, the agreement is scheduled for review in 2026. Trump’s unpredictable tariff approach raises questions about the long-term viability of North American trade cooperation.
Background tensions have been mounting for months. Trade talks between the U.S. and Canada were briefly suspended in June after Canada proposed a digital services tax targeting U.S. tech firms, a move later rescinded. With only weeks before the new tariffs take effect, small business owners and entrepreneurs in both countries face growing uncertainty as cross-border costs rise and negotiations remain unsettled.
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