President Trump says 35% U.S. tariffs on imports from Canada are set to take effect in August

North American trade tensions between the United States and Canada remain high with President Donald Trump stating on a social media post this week that he sent Canadian Prime Minister Mark Carney a letter stating that effective August 1, the U.S. will charge Canada a 35% tariff on products imported into the U.S. from Canada, separate from tariffs on specific sectors.

Tariffs placed on Canada by the U.S. currently include:

• a 25% tariff on non-USMCA goods;
• a 10% tariff on energy resources and potash;
• a 50% tariff on steel and aluminum; and
• a 25% tariff on autos and auto parts

In the letter to Carney, President Trump said that the U.S. initially imposed tariffs on Canada in an effort to combat the U.S. fentanyl crisis, with Canada subsequently replying in kind with tariffs on U.S. goods imported into Canada.

On March 4, Canada implemented 25% tariffs on $30 billion worth of U.S. imports, including consumer and household goods, followed on March 12, with 25% tariffs on $29.8 billion worth of U.S. goods, including steel, aluminum, tools, computers, and other items.

When the U.S. implemented 25% tariffs on steel and aluminum products imported into the country, the White House said that these tariffs are being implemented to protect the nation’s critical steel and aluminum sectors, which it said “have been harmed by unfair trade practices and global excess capacity.”

These tariffs were initially implemented in March 2018, during President Trump’s first term in office under Section 232 of the Trade Expansion Act of 1962, due to security concerns, in the form of a 25% tariff on steel imports and a 25% tariff on aluminum imports. The White House said that when these tariffs were rolled out in 2018, various countries, including Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine, and the United Kingdom, received exemptions, which it said prevented the effectiveness of the tariffs.

In terms of the scheduled 35% tariff on goods from Canada imported into the U.S., the letter said that goods transshipped to evade this higher tariff will be subject to that higher tariff.

“As you are aware, there will be no tariff if Canada, or companies within your country, decide to build or manufacture product within the United States, and, in fact, we will do everything possible to get approvals quickly, professionally, and routinely—in other words, in a matter of weeks,” the letter stated. “If for any reason you decide to raise your tariffs, then, whatever the number you choose to raise it by, will be added onto the 35% that we charge.”

And he added that Canada has many tariff and non-tariff policies and trade barriers that cause unsustainable trade deficits against the U.S., noting that Canada charges the U.S. tariffs on U.S. dairy farmers up to 400%.  

In a post on X, Carney said throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended its workers and businesses and will continue to do so as it works towards the revised deadline of August 1.

“Canada has made vital progress to stop the scourge of fentanyl in North America,” said Carney. “We are building Canada strong. The federal government, provinces and territories are making significant progress in building one Canadian economy. We are poised to build a series of major new projects in the national interest. We are strengthening our trading partnerships throughout the world.”

Keith Prather, Managing Director, Armada Corporate Intelligence, observed in a previous interview that retaliatory tariffs implemented by the Canadian Government of 25% in March would hit politically-sensitive items like orange juice, peanut butter, alcohol, coffee, appliances, apparel and cosmetics, and motorcycles among other items. And he added that if the trade war persists, Canadian officials have threatened additional countermeasures on $155 billion in U.S. products, ranging from EVs to ag products, and additional manufactured goods. 

“The U.S. actually had a trade surplus of $30 billion with Canada when energy and services trade was stripped out of the trade balance analysis,” said Prather. “When energy, services, and product trade are all included, the U.S. ran a deficit of about $35.7 billion. Tariff policy is likely to follow the 2018-2019 period in which many economically sensitive items were able to obtain tariff exclusions, beyond the current USMCA goods compliant regulatory waivers (which accounts for approximately 38% of US imports from Canada). Negotiations are ongoing and conditions seemingly change by the hour, but the risk is significant.

Without exclusions, if all tariffs and retaliatory actions were 'imposed as threatened,’ Canada's GDP would fall 2.5-4 percentage points (pushing GDP into mild contraction) according to estimates from the Bank of Canada. Because the U.S. has less reliance on trade for contributions to GDP, the US would likely see GDP reductions of 0.3-0.6 percentage points (annual GDP growth of around1.5% based on current 2025 GDP forecasts). Much can happen, and the final negotiation will likely bring a mild increase in tariffs when all is said and down, but the process of getting there is volatile.”