U.S. President Donald Trump Threatens 35% Tariff Against Canadian Imports

In early April, U.S. President Donald Trump unveiled his global tariff policy. At the time, the President promised “90 deals in 90 days.” His plan didn’t go well. Fears of what a global trade war would do to the economy sent stocks reeling.

What’s Happening with the U.S. Trade War?

Just days after announcing what he called “Liberation Day” on April 2, the President announced a 90-day pause on new tariffs. Despite promises of 90 deals in 90 days, very few have been signed. When that 90-day extension expired, he extended it to August 1, with a caveat, warning “no extensions will be granted.”

Since few countries were lining up to sign tariff deals, President Trump decided to take a more passive approach—sending out letters to the leaders of various countries. On July 10, he sent a letter to Prime Minister Mark Carney, threatening to impose tariffs of 35% on all Canadian goods starting August 1.

According to the White House, tariffs on Canadian imports aren’t expected to impact those already covered under the Canada-U.S.-Mexico Agreement (CUSMA), the free trade agreement that replaced the North American Free Trade Agreement (NAFTA).

In theory, only goods currently facing tariffs of 25% not protected under CUSMA are expected to be hit with levies of 35% come August 1. Exports to the U.S. that are outside of CUSMA account for roughly 14% of trade between the two countries. 

There are some exceptions. Energy and potash exports to the U.S. will stay at 10%, while steel, aluminum, and copper imports are hit with a 50% tariff.

Officials at the White House warned that President Trump has not made a final decision, so things could change. His goal, of course, is to cajole foreign companies to relocate their factories to the U.S. 

Most countries are dismissive of these threats, although they are paying a heavy price. The tariff rate has soared in 2025. So too is the amount of revenue his tariffs have generated. Since President Trump was sworn into the Oval Office in January, the U.S. tariff rate has jumped from 2.5% to 16.6%. That number will climb to 20.6% should the tariffs he’s threatening to impose on trading partners go into effect on August 1. 

How much money has the U.S. generated from tariff revenue from Canada this year? Data from the U.S. Customs and Border Protection shows the U.S. has raked in approximately $148.9 billion (USD $108.75 billion) in total duties, taxes and fees, up to May 31. To put that number into context, in all of 2024, it collected $120.6 billion (USD $88.07 billion). 

What Is Trump’s Rationale for the Tariffs?

In the letter to Prime Minister Carney, President Trump said that the tariffs were being implemented, in part, because of Canada’s failure to prevent fentanyl from coming into the U.S. In fact, he declared a national emergency over fentanyl to justify tariffs on Canada and Mexico. But this excuse doesn’t hold up.

According to the U.S. Customs and Border Patrol, just 0.2% of seizures of fentanyl entering the U.S. are made at the Canadian border. The rest is seized at the U.S. border with Mexico.

Trump also falsely claims that Canada hits U.S. dairy farmers with tariffs up to 400%. The high levies only kick in after the U.S. hits a certain quantity of tariff-free sales to Canada. That number has never been hit. It should be noted that the tariff on dairy sales was actually negotiated by Trump.

These issues are hardly a major threat to the American economy and national security.

Fentanyl and dairy are simply red herrings the President is using to get concessions on trade. Most analysts believe Trump is looking for a similar trade deal to one the U.S. negotiated with the U.K. In May, the U.K. agreed to a 10% tariff on most imports into the U.S.

Will Canada agree to a 10% tariff deal with the U.S? Most economists think the number will be lower, but that Canada might agree to other concessions. The August 1 deadline is fast approaching, so we won’t have to wait long to see what happens and how it will impact the Canadian economy and Canadian stocks.

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