President Donald Trump announced on Thursday that the United States will impose a 35% tariff on all imports from Canada, effective August 1, 2025. This move has reignited tensions with Canada, a key trading partner, after a period of relative calm in their trade relations.
In a letter shared on Truth Social, Trump expressed frustration with Canada’s recent retaliatory tariffs, stating, “Instead of working with the United States, Canada retaliated with its own Tariffs.” Until now, imports from Canada that were not covered by the U.S.-Mexico-Canada trade agreement had faced a tariff of 25%, while energy imports were taxed at 10%.
During an interview with NBC News earlier that day, Trump hinted at forthcoming tariff changes, signaling a more aggressive stance toward Canadian goods. Canada was the recipient of over $410 billion in U.S. goods last year, making it one of America’s top trading partners. However, the trade relationship has soured since Prime Minister Mark Carney took office in March.
Tensions escalated significantly at the end of June when Trump announced he was terminating all trade negotiations with Canada, citing its digital services tax, which was scheduled to be implemented by June 30. In response, Canada imposed a quota on certain steel imports and a 50% surcharge on any imports that exceeded that quota.
Carney defended Canada’s actions, claiming that the government was protecting its industry from what he called “unjust U.S. tariffs.” Following Trump’s latest announcement, Carney took to X to underline Canada’s commitment to its workers and industries.
The announcement may have caught Carney off guard, particularly after the Canadian government rescinded its digital services tax to appease Trump on June 29. The two leaders had even discussed working towards a trade agreement during a phone call, setting an initial deadline for July 21.
Trump has characterized the digital services tax as an “attack” on the U.S. and its technology companies, which would have subjected firms earning over $15 million in Canadian revenue to significant additional taxes. Lobby groups had indicated that this tax could cost U.S. tech businesses up to $3 billion by June 30.
In his Truth Social message, Trump warned that should Canada retaliate further, the United States would consider increasing the tariff beyond 35%.
Despite the ongoing tensions, Canada’s lead trade negotiator and its ambassador to the U.S. stated that communications between Canadian and American teams were nearly daily as they worked towards a resolution.
Trump concluded his letter by suggesting a possible reevaluation of the new tariff if Canada cooperates to halt fentanyl flow across the border, a claim Canada has labeled as “unjustified.” According to data from Customs and Border Protection, only 43 pounds of fentanyl were seized at the northern border last year, out of a total of 21,900 pounds seized nationwide.
Following Trump’s announcement, U.S. stock futures fell sharply, with the S&P 500 index expected to decline by approximately half a percent at Friday’s opening, and the Dow Jones Industrial Average futures indicating a drop of over 200 points.
image source from：nbcnews
