Earlier this month, former President Donald Trump announced that a 35% tariff on all Canadian exports will go into effect starting August 1. This decision stems from Canada’s ongoing failure to address the flow of fentanyl into the United States, an issue Trump has consistently highlighted. He emphasized that the retails differ from current sector-specific levies already in place. These levies have undeniably stretched trade relations between the two countries to their breaking points.
Trump’s announcement comes at a particularly sensitive time, as the U.S. just slapped a 25% tariff on certain Canadian products. On top of that, since 2018, there has been a global 50% tariff on all aluminum and steel imports. He threatened a 25% tariff on cars and trucks not produced in the United States. In addition to this new investment, he announced that a new 50% tariff on copper imports will begin next month.
Indeed, the former president has decried very frequently Canada’s trade practices. He is especially concerned with the current levies imposed on U.S. dairy farmers and the overall trade deficit the U.S. holds with Canada. He made it clear that if Canada were to respond to these tariffs, he would not think twice about raising them even more.
“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter. These tariffs may be modified, upward or downward, depending on our relationship with your country.” – Donald Trump
Canada is refusing to retreat in the wake of intimidation. It is already retaliating against America’s tariffs by imposing its own retaliatory levies on American products. The Canadian government has publicly stated its intention to introduce additional counter-tariffs if a mutually agreeable deal is not reached by the deadline.
Particularly considering that trade between the U.S. and Canada is so massive, about three-quarters of Canadian goods sold are bought by Americans. Beyond our become our most important auto manufacturing partner and a growing supplier of metals key to American manufacturing. This growing interdependence makes the ongoing US-China tariff dispute, which has the potential to be economically disastrous for both nations, all the more difficult.
Trump’s recent correspondence indicates that he has sent over 20 letters to U.S. trade partners, including one addressed to Canada, emphasizing his administration’s stance on trade matters. He announced that Canadian businesses would be exempt from tariffs. For one thing, they simply have to choose to produce their products in America.
“As you are aware, there will be no tariff if Canada, or companies within your country, decide to build or manufacture products within the United States.” – Donald Trump
Industry leaders have cautioned about the disruption caused by the uncertainty sown by this trade dispute. Or as one Canadian business leader put it, “In business, indecision is death. That sentiment is shared by many companies hampered by an unpredictable tariff and trade policy environment.