Canadian goods by the United States starting on August 1
New tariffs will be imposed on Canadian goods by the United States starting on August 1. President Donald Trump announced an increase in import tariffs to 35 percent, despite Canada agreeing to withdraw its proposed digital services tax following US demands.
Trump has sent out "tariff letters" to various countries this week, informing them of planned US trade levies set to take effect on August 1 if trade agreements are not reached before then. In late June, Trump threatened to halt trade talks with Canada due to its intention to implement a digital services tax that would impact US tech companies financially. Canada swiftly agreed to cancel the tax.
However, Trump informed Canadian Prime Minister Mark Carney in a letter released on social media that a new 35 percent tariff, up from the initial 25 percent imposed in March, will be implemented on August 1. The tariff may increase further if Canada responds with its own tariffs.
Canada is the second-largest trading partner of the US after Mexico. In 2024, Canada purchased $349.4bn worth of US goods and exported $412.7bn, resulting in a $63.3bn trade surplus with the US. Key Canadian exports to the US include oil, cars, auto parts, industrial machinery, and nuclear reactors.
Trump initially imposed a 25 percent tariff on all Canadian goods and a 10 percent tariff on Canadian energy resources when he assumed office. He cited concerns about Canada's involvement in fentanyl production, an opioid drug. The tariffs were temporarily paused but reinstated in March and are now set to increase to 35 percent.
Canada, a major supplier of steel and aluminum to the US, was significantly affected by Trump's 25 percent global tariffs on these metals, which were raised to 50 percent in June. Trump also imposed a 25 percent tariff on imported cars and car parts, aiming to reduce trade imbalances.
Trump's recent tariff actions are part of his efforts to address trade deficits and enforce trade agreements. He has sent similar tariff letters to multiple countries this week and plans to announce new tariffs for the European Union, effective from August 1.
Despite Trump's concerns about fentanyl smuggling and trade deficits with Canada, only a small percentage of fentanyl seizures entering the US were traced back to Canada. Carney has committed to combating fentanyl trafficking and collaborating with the US on this issue.
Carney has been working to maintain strong trade relationships with other countries, such as the UK and the EU, to diversify Canada's exports. Trump's tariff announcements have been met with mixed reactions, with financial markets showing resilience and experts speculating on potential outcomes.