US President Donald Trump hits Canada with tariffs, again. He announced a hike in tariffs on most Canadian imports to 35%, effective August 1, despite Canada agreeing to drop its planned digital services tax. This move comes as a result of a wave of “tariff letters” Trump has sent to various countries warning of increased US trade levies if deals are not reached soon.
Trump’s tariffs on Canada build on existing duties. Canada is America’s second-largest trading partner and runs a $63 billion trade surplus with the US, mainly exporting oil, cars, and industrial machinery.
The US justifies the tariffs by accusing Canada of not doing enough to curb fentanyl smuggling into the US, despite most fentanyl seizures occurring at the Mexico border.
Canada’s Prime Minister Mark Carney has pushed back against Trump’s accusations, insisting Canada is committed to fighting fentanyl and protecting its sovereignty.
Meanwhile, Canada has also sought to strengthen trade ties with the UK and EU despite its tensions with the US.
Trump has applied similar tariff threats to over 20 countries this week, including Brazil, which faces a proposed 50% tariff over political disputes. Financial markets have so far largely dismissed these threats, expecting Trump may ultimately back down.