U.S. President Donald Trump holds a signed executive order during an event in the East Room of the White House, Tuesday, April 8, 2025, in Washington. Image: AP.
(The Post News)- In a significant escalation of his trade policies, US President Donald Trump announced a new 35% tariff on all Canadian imports, effective August 1, 2025. This decision, communicated to Canadian Prime Minister Mark Carney on Thursday, July 10, also included broader threats of 15% to 20% blanket tariffs on most other trading partners, signaling a widened global trade conflict.
This new Canadian tariff builds on existing duties, including a 25% tariff on Canadian auto parts and a 50% tariff on steel and aluminum. Trump explicitly warned that any retaliatory tariffs imposed by Canada would be added to the new 35% rate. Prime Minister Carney, in response, affirmed Canada’s commitment to defending its workers and businesses as negotiations continue.
Trump justified these measures by citing Canada’s alleged role in the “fentanyl crisis” and “unsustainable trade deficits.” However, official data from US Customs and Border Protection indicates that fentanyl seizures at the Canada-U.S. border represent less than 0.1% of total U.S. fentanyl seizures. Regarding trade, the U.S. goods trade deficit with Canada was $63.3 billion in 2024, significantly smaller than the $295 billion deficit with China. Canada remains a crucial trading partner, having purchased $349.4 billion in US goods in 2024, with approximately three-quarters of its exports going to the U.S., and trade accounting for around two-thirds of its economy.
The full scope of the new Canadian tariffs remains uncertain. An administration official suggested that goods complying with the US-Mexico-Canada Agreement would “likely” be exempt, although no final decision has been announced. USMCA-compliant products, such as automobiles meeting the 75% regional content rule, could potentially avoid these new duties.
The legality of Trump’s broader tariff actions is currently under challenge in US courts. A May 2025 ruling by the U.S. Court of International Trade found that the president had exceeded his authority. An appeal hearing is scheduled for July 31, which could potentially invalidate these recent tariff announcements. The USMCA itself is due for a review process starting July 1, 2026.
Beyond Canada, Trump has sent over 20 letters to various countries this week, outlining impending tariffs if new trade deals are not secured by August 1. These include a 50% tariff on Brazil and a threatened 50% tariff on copper imports.
Global market reactions on Friday, July 11, were cautious. While US stocks saw declines, the impact was relatively contained compared to previous tariff-related turmoil. The U.S. Dollar Index rose above 97.50, and USD/CAD surged towards 1.3700, as traders sought safety in the greenback amidst heightened trade tensions. The CBOE Volatility Index has also dropped significantly since April, suggesting some degree of market calm.
However, The Budget Lab at Yale estimates that the cumulative effect of all 2025 tariffs could lead to a 1.9% rise in short-run US consumer prices, equating to an average per-household income loss of $2,500 in 2025. Significant price increases are anticipated for clothing, textiles, food, and motor vehicles.
Despite the broader trade uncertainty, the tech sector continues to show strong performance, with Nvidia reaching a record market value above $4 trillion on Thursday. Bitcoin also surged above $118,000 on Friday, reflecting a “risk-on” sentiment in parts of the market, while CNN’s “Fear & Greed Index” indicates “extreme greed” or “greed.”
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