President Donald Trump announced on Thursday that Canada will face a 35 percent tariff on its exports to the United States starting August 1, deepening a burgeoning global trade war that has seen similar threats issued to dozens of economies this week.
The punitive measure was conveyed in a letter from President Trump to Canadian Prime Minister Mark Carney. This latest move is one of more than 20 such letters issued by Trump since Monday, as he intensifies his protectionist trade policies.
Canada and the U.S. have been engaged in ongoing trade negotiations, with hopes of reaching a deal by a July 21 deadline. However, Trump’s laAtest tariff threat appears to have shifted that timeline to August 1.
Both Canada and Mexico are actively seeking ways to satisfy Trump’s demands to put the free trade agreement uniting the three countries – the United States-Mexico-Canada Agreement (USMCA) – back on track.
“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1,” Prime Minister Carney posted on the social media platform X Thursday night.
The USMCA replaced the North American Free Trade Agreement (NAFTA) in July 2020, following Trump’s successful push for renegotiation during his first term.
The agreement was due for review by July of next year, but Trump has thrown the process into disarray by initiating renewed trade conflicts since taking office in January.
Canadian and Mexican products were initially hit hard by 25 percent US tariffs, with a lower rate for Canadian energy, when Trump first launched his trade war.
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He targeted both neighbors, citing concerns over illegal immigration and the flow of illicit drugs, particularly fentanyl, across borders. While Canada contributes less than one percent of fentanyl to the illicit US supply, according to government data, this remains a stated justification for the tariffs.
Despite the escalating tensions, Bloomberg reported, citing an unnamed official, that existing USMCA exemptions for a large swathe of products are poised to remain unchanged.
The letter to Canada comes despite what had been a period of seemingly warming relations between Trump and Prime Minister Carney.
Carney visited the White House on May 6 for a cordial meeting in the Oval Office and they met again at the G7 summit last month in Canada, where leaders urged Trump to de-escalate his trade war.
Canada also recently agreed to rescind taxes impacting US tech firms, which had previously prompted Trump to call off trade talks.
In a separate development, Trump announced in an interview with NBC that he is considering imposing blanket tariffs of between 15 and 20 percent on August 1 on countries that have not yet received one of his specific tariff letters.
These individualized letters, sent to over 20 nations, detail tariff rates as high as 50 percent (as seen in the case of Brazil) set to take effect on August 1, unless new trade terms can be negotiated.
Trump indicated that a letter to the 27-country European Union, the US’s largest trading partner, would be sent “today or tomorrow (Friday).”
Brazilian President Luiz Inácio Lula da Silva stated on Thursday that he is willing to negotiate with the United States following Trump’s tariff threat, while reiterating that the Brazilian government is evaluating reciprocal measures.
In his letter to Lula, Trump notably criticized the treatment of his right-wing ally, former Brazilian President Jair Bolsonaro.