The Topline
- U.S. President Donald Trump issued an executive order on August 1, increasing tariffs on Canadian imports from 25% to 35%
- Trump had previously imposed an August 1 deadline for a new trade deal, which has not been met
Retaliation for fentanyl imports (apparently)
Trump cited Canada’s alleged failure to adequately curb fentanyl trafficking as justification for the tariffs.
He had threatened to impose the higher tariff on Canada if no deal between the two countries was reached by Friday – his deadline for reaching trade agreements with dozens of countries. but
Canada was not included in Trump’s updated list of tariff rates on other countries announced late Thursday. Those import duties are due to take effect on Aug. 7.
> Dive Deeper
On Thursday, the president said Canada’s announcement it will recognize a Palestinian state would “make it very hard” for the United States to reach a trade agreement with its northern neighbor.
These new tariff hikes are part of a broader 2025 trade conflict launched by Trump in February, impacting multiple sectors—especially lumber, steel, aluminum, and automobiles—and affecting over 68 other countries.
Canada sends around 75% of all its exports south of the border and is vulnerable to U.S. trade action, though about 90% of Canadian exports to the U.S. in May were exempt under the USMCA, according to Reuters.
Meanwhile, Mexico was granted a 90‑day exemption period, keeping its tariffs unchanged at 25% for now.
> Other Voices
U.S. Commerce Secretary Howard Lutnick said Trump could reconsider the tariff if Carney "starts turning on the charm and if he takes off his retaliation."
A recent poll of MAGA Republicans found strong support for assertive trade measures—endorsing tariffs and industrial revival as fundamental policy.
Lori Turnbull, a political scientist at Dalhousie University in Halifax, Nova Scotia, told Washington Post , “There seems to be a kind of targeting of Canada.” She added that Trump seems to be putting “Canada in a different pile” from the 86 other countries currently facing export tariffs.
Canada holds strong (for now)
Canadian Prime Minister Mark Carney expressed disappointment in the tariffs, stating that Canada accounts for only about one percent of U.S. fentanyl imports. He added that the federal government has significantly invested in border security to combat illicit drugs.
“Canada[…] has been working intensively to further reduce these volumes,” he said, pointing to investments earlier in the year to bolster border security.
He pledged to diversify export markets, boost industrial competitiveness, and encourage domestic consumption to protect Canadian jobs.
Prime Minister Mark Carney had previously tempered expectations over tariffs, saying Ottawa would only agree to a deal “if there’s one on the table that is in the best interests of Canadians.”
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Canada is expected to pursue WTO dispute processes, arguing these tariffs breach USMCA and WTO rules, according to the Washington Post .
To combat the U.S. tariffs and bolster local economies, Canadians have taken an “elbows up” approach, boycotting American products where possible.
The overall economic effect of the boycotts to American exporters has, so far, been difficult to quantify and appears modest.
> Other Voices
Pierre Poilievre, Conservative Party leader and Carney’s rival in the April federal election , posted to X that the PM “should accept nothing short of” a deal that “[ends] all U.S. tariffs on Canada. That means zero tariffs on our steel, aluminum, softwood, autos, energy, agriculture and everything else.”
Premier Doug Ford of Ontario posted to X , “"Canada shouldn't settle for anything less than the right deal. Now is not the time to roll over. We need to stand our ground.”
The Canadian Chamber of Commerce said the prime minister is “right to prioritize a strong, future-focused deal over a rushed one.”
