Trump Hits Canada With 35% Tariff Amid Broader Trade Escalation

U.S. Escalates Trade War With Sharp Tariff Hikes as Allies and Markets Brace for Fallout

WASHINGTON/OTTAWA, July 10, 2025 — U.S. President Donald Trump has announced a sweeping 35% tariff on all Canadian imports, dramatically intensifying a trade clash with America’s second-largest trading partner. The new tariff, set to take effect August 1, marks a significant jump from the previous 25% and has sent ripples through global markets already uneasy about broader U.S. protectionist moves.

In a letter posted on his social media platform late Thursday, Trump informed Canadian Prime Minister Mark Carney that the tariff would apply across most product categories and could rise further if Canada retaliated.

“We’re just setting our tariffs,” Trump told NBC News in a separate interview. “Whether it’s 20% or 15%, the rest of the world will pay, and we’ll work out the details later.”

What the Tariff Means for Canada—and the World

While some carve-outs are expected—namely for goods covered by the United States-Mexico-Canada Agreement (USMCA), and certain energy and fertilizer imports—the move places heavy strain on U.S.-Canada relations just as both governments were finalizing a new economic and security agreement.

Prime Minister Carney responded swiftly on X, pledging to defend Canadian workers from “unfair and unilateral” U.S. actions.

“Canada has made vital progress to stop the scourge of fentanyl in North America,” Carney wrote, referring to Trump’s claim that the U.S. could ease tariffs if Canada took stronger action on the opioid crisis. “We are committed to continuing to work with the United States to save lives and protect communities in both our countries.”

One U.S. official said exclusions for USMCA and some goods were likely, but the tariff’s wide scope will hit sectors from dairy to automotive parts.

Fentanyl Allegations and Political Motives

Trump also linked the tariff to the fentanyl crisis, accusing Canada of enabling synthetic opioid flows—claims that Canadian officials reject. Ottawa insists it has tightened border security and that only a negligible amount originates in Canada.

Critics argue the fentanyl argument masks deeper economic goals tied to Trump’s “America First” platform. Trade analysts believe the new tariffs could pressure Canada and others into faster concessions.

Global Fallout and Economic Consequences

The move follows recent tariff hikes against Japan, South Korea, and a 50% copper tariff. Markets are now bracing for Trump’s expected EU tariff announcement.

“The potential escalation between the EU and the U.S. is a big deal for financial markets,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia.

Stock futures dipped in North America and Europe, and commodity prices surged on fears of disrupted global trade flows.

Canada-U.S. Trade Relationship at a Crossroads

Canada remains a vital economic partner for the U.S., buying $349.4 billion in goods and exporting $412.7 billion in 2024, per U.S. Census data.

Carney’s government, elected earlier this year with a pro-trade mandate, hoped to finalize a bilateral economic and security pact by July 21. However, those talks now face uncertainty following Trump’s latest action.

Last month, Ottawa dropped a planned digital tax on U.S. tech firms after Trump halted talks over what he called a “blatant attack.” That goodwill has quickly unraveled.

Domestic and International Reactions

In Washington, some hailed Trump’s decision as long overdue. Others warned of price hikes and retaliatory measures.

“A 35% tariff is a hammer blow to Canadian exporters,” said Dana Levesque, CEO of the Canadian Trade Federation. “This will hurt workers on both sides of the border and disrupt years of integrated economic cooperation.”

Myanmar and the Philippines have already moved to send delegations to Washington to renegotiate their own tariffs.

What’s Next?

Trump’s letter left the door open: tariffs may rise or fall “depending on our relationship.” Observers say the coming weeks will be critical, especially as the EU prepares its response.

For now, businesses and governments alike are bracing for more volatility in an already fragile global trade system.

This story was first reported by Reuters.