Trump Escalates Trade Tensions with Canada, Announces 35% Tariff on Imports

WASHINGTON | July 11, 2025 — U.S. President Donald Trump has intensified his administration’s protectionist agenda, announcing a 35% tariff on Canadian imports effective August 1, and signaling sweeping tariff increases on other key trading partners, including Japan, South Korea, and the European Union.

In a letter released via his social media platform on Thursday, President Trump informed Canadian Prime Minister Mark Carney of the new tariff measure, warning that the rate could increase further should Ottawa pursue retaliatory action.

“This tariff is necessary to protect American industries and correct long-standing trade imbalances,” the president stated, reiterating his administration’s frustration over what he described as Canada’s "unfair trade practices" and the "dangerous flow of fentanyl" into the United States. Trump further suggested that cooperation from Canada on drug enforcement could prompt a reconsideration of the tariff levels.

Prime Minister Carney, responding via X (formerly Twitter), reaffirmed his government’s commitment to defending Canadian businesses and workers, while maintaining a willingness to collaborate with Washington on cross-border security and public health challenges.

“Canada has made vital progress in combating the fentanyl crisis in North America,” Carney wrote. “We remain committed to working with the United States to save lives and protect communities in both our countries.”

The newly announced 35% tariff marks a significant escalation from the existing 25% rate and delivers a blow to Prime Minister Carney’s efforts to secure a revised economic and security agreement with the U.S. by July 21. Notably, goods currently protected under the United States-Mexico-Canada Agreement (USMCA) are expected to remain exempt, and existing 10% tariffs on energy and fertilizers are not set to change—though White House officials confirmed a final decision is still pending.

The U.S. president’s tariff expansion strategy has sent ripples across global financial markets. U.S. and European stock futures dipped during Asian trading hours on Friday, amid investor uncertainty over potential tariffs on the European Union expected to be announced later in the day.

“The potential escalation between the EU and the U.S. is a major concern for financial markets,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia. “If this mirrors the intensity of the U.S.-China trade war, it could prove extremely destabilizing.”

In a separate interview with NBC News, Trump indicated that further tariff announcements are imminent. “Not everybody has to get a letter,” he said. “We’re just setting our tariffs. All remaining countries will pay—whether it’s 20% or 15%. We’ll work that out now.”

Several nations are already responding to the shifting U.S. trade landscape. Myanmar's military leadership reportedly offered to send a delegation to Washington to renegotiate its current 40% tariff, while the president of the Philippines is expected to travel to the U.S. later this month to discuss existing trade measures.

Canada remains the second-largest trading partner of the United States, after Mexico, and the largest single-country purchaser of U.S. goods. According to the U.S. Census Bureau, Canada bought $349.4 billion in American products last year, while exporting $412.7 billion in goods to the U.S.

Carney, who secured a comeback election victory earlier this year on promises to stabilize trade relations with Washington, has faced mounting pressure to reach a new agreement. Last month, his government scrapped a proposed digital services tax targeting major U.S. tech firms, after Trump abruptly suspended trade negotiations, calling the tax a “blatant attack on American companies.”

In his letter, Trump offered no specifics on the state of negotiations, but left the door open for future adjustments. “Tariffs may be modified, upward or downward, depending on our relationship with your country,” the president wrote.

As the August 1 deadline approaches, attention now turns to whether bilateral diplomacy can temper a looming trade standoff between two of North America’s closest economic allies.