US President Donald Trump has announced that all imports from Canada will have a 35% tariff as of August 1. He sent a letter to the country’s president, Mark Carney, informing him of the new rate, which has also been posted on his Truth Social account.
Recent trade deal negotiations with the US
On April 2, Trump announced that the US would be imposing a 10% baseline tariff on all imports and additional “reciprocal” tariffs targeting countries with which the US runs a trade deficit, aiming to promote domestic manufacturing and address perceived trade imbalances. However, just a week later, he suspended them for 90 days to allow time for trade negotiations that would ease the market turmoil.
Those negotiations have not gone as smoothly as planned, and deals have only been struck with Vietnam and the UK, with a trade truce in place with China. Earlier this week, Trump extended the tariffs deadline again to August 1, but has been announcing finalised rates with dozens of nations since then via letters to their leaders, with Canada’s being the 23rd. He has also confirmed that there will be no further extensions to the deadline.
At the G7 Summit back in June, Trump and Carney announced that they were committed to reaching a trade deal within 30 days, so by July 21. But with the new rate announcement, it appears the effort has stalled.
Canada was not assigned a new tariff in April; instead, its imports continued to face a 25% tariff, with energy products remaining at 10%, as imposed initially in February. Goods compliant with the United States–Mexico–Canada Agreement (USMCA), including auto parts, remained exempt.
In addition to the import tariffs imposed on individual nations, Trump has implemented sector-specific rates for those without existing trade agreements. On June 3, he doubled the import tariff on steel and aluminium to 50%, citing efforts to bolster the domestic metals industries, and he imposed a 25% tariff on global car imports in March.
These are important to Canada, as it is a major supplier of metals and autos, but Trump clarified in his letter to President Carney that the 35% tariff is “separate from all Sectoral Tariffs.” It remains unclear if it will apply to USMCA-compliant products.
Trump did caveat that he will consider an “adjustment” if Canada agrees to help “stop the flow of Fentanyl.” US officials have alleged that Canada serves as a transit point for illicit fentanyl and precursor chemicals, often originating from China, due to vulnerabilities in its border enforcement. However, less than one per cent of the fentanyl intercepted by federal agents last year was found at the Canadian border, according to The New York Times.
Canada has been open to negotiations with the US president before. In June, it agreed to withdraw its proposed Digital Services Tax targeting big tech firms, such as Google, Meta, and Apple, after Trump threatened to call off trade talks due to it.
New tariffs announced so far
Trump has so far sent letters to 23 countries that he does not have a trade deal with, informing them of the final reciprocal tariff they will be subject to as of August.
In an interview with NBC News on Thursday, Trump said he expected both the Canada and EU tariffs to be announced “over the next couple of hours.” With Canada’s revised tariff already revealed, the EU could be next.
Brazil
The tariff on Brazil is the highest among all nations, and in his letter to President Luiz Inácio Lula da Silva, Trump justified the move by citing what he called a “witch hunt” against former President Jair Bolsonaro, along with “insidious attacks on free speech” stemming from Brazil’s restrictions on US-based social media platforms.
Bolsonaro is facing prosecution over his alleged role in the January 2023 riots in Brasília, where supporters stormed government buildings in an attempt to overturn the election results, a scene reminiscent of the January 6 Capitol attack in the US involving Trump’s followers.
Brazil has also been suspending social media accounts on Trump’s Truth Social platform and temporarily banned X, after they failed to remove content deemed to spread disinformation.
President Lula posted on X that “any unilateral tariff increases will be addressed in accordance with Brazil’s Economic Reciprocity Law.”
Copper, pharmaceuticals, raising baseline tariff
This week, President Trump imposed a new import tariff on copper of 50%, due to take effect on August 1. In a post on Truth Social, he said the decision was made after a “national security assessment” and highlighted its importance in data centres, batteries, and military applications. The announcement sent copper prices soaring.
Trump has also suggested that he will impose a 200% tariff on pharmaceuticals in the future and told NBC News that he is considering increasing the baseline tariff on all countries from 10% to up to 20%.
Trade deals have been penned with Vietnam, UK, and China
So far, trade deals have only been struck with Vietnam and the UK. The former has agreed to a 20% tariff on Vietnamese exports and a 40% levy on goods suspected of being transshipped through the country. The latter accepted lower import duties on British cars and aerospace materials.
The US has also made a tentative agreement with China that would impose a 55% tariff on all Chinese imports and a 10% tariff on American exports, although this is not yet set in stone.
Find out how the US tariffs could impact the price of an iPhone and other tech products.
