United States President Donald Trump has announced new 35% tariffs on Canadian imports, effective August 1, 2025, escalating trade tensions between Washington D.C. and Ottawa. Trump cited Canada’s alleged retaliation and lack of cooperation on halting the flow of fentanyl as reasons for the hike. The decision follows Ottawa’s removal of a digital services tax on June 29, aimed at reviving trade negotiations. Canadian Prime Minister Mark Carney reaffirmed Canada’s commitment to fight fentanyl and support cross-border cooperation.
U.S. President Donald Trump announced sweeping 35% tariffs on Canadian imports, effective from August 1, 2025, intensifying the already tense trade relations between the two North American neighbors. The new tariffs come in response to what Trump described as Ottawa’s retaliatory actions and inadequate efforts to curb the flow of fentanyl into the United States.
In a letter addressed to Canadian Prime Minister Mark Carney, posted on Trump’s platform Truth Social, Trump wrote, “Instead of working with the United States, Canada retaliated with its own Tariffs.” He further linked the fentanyl crisis to the decision, stating that a cooperative approach from Canada could “perhaps” lead to an adjustment of the tariff hike.
Canada has made vital progress to stop the scourge of fentanyl in North America. We are committed to continuing to work with the United States to save lives and protect communities in both our countries.”
Prime Minister Carney (statement posted on X)
The newly imposed tariffs are in addition to existing duties. Canada already faces 50% tariffs on steel and aluminum, 25% on automobiles, and a forthcoming 50% levy on copper shipments starting August 1. Some Canadian imports are subject to a prior 25% levy connected to fentanyl-related policies, with certain exemptions for goods compliant with the United States-Mexico-Canada Agreement (USMCA).
Trump warned Ottawa that any further retaliatory measures would lead to proportional hikes beyond the announced 35%, noting that “goods transshipped to evade this higher tariff will be subject to that higher tariff.”
The U.S. had recorded a total goods trade volume of USD 761.8 billion with Canada in 2024, with a trade deficit of USD 62 billion, according to U.S. Census Bureau data. In the first five months of 2025, the trade deficit has already grown 9.8% year-on-year to USD 25.6 billion.
Despite agreeing on June 29 to restart trade negotiations and work toward a deal by July 21, Trump’s administration appears committed to leveraging tariffs as a negotiating tool. This includes dissatisfaction over Canada’s now-withdrawn digital services tax, previously applied to U.S. firms.
In March 2025, in retaliation to earlier U.S. duties, Canada had imposed its own 25% tariffs on selected American exports, ranging from vehicles to food and computer equipment. Canada had stated that those tariffs would remain until U.S. levies on Canadian steel and aluminum were lifted.
As the August 1 deadline approaches, both governments are under pressure to find common ground to prevent further economic fallout between two of the world’s largest trading partners.