President Donald Trump is threatening 35% tariffs on goods from Canada, accusing America's northern neighbor of unfair trade practices and failing to stop the flow of fentanyl into the United States.
The United States buys about three-quarters of Canada's goods, making Trump's tariff a significant threat to Canada's economy. Trump said the steep penalty will take effect August 1, unless Canada takes steps to cooperate.
Trump has often complained about Canadian restrictions on American businesses, and he warned in a letter to Prime Minister Mark Carney that conditions still need to change.
"Fentanyl is hardly the only challenge we have with Canada, which has many Tariff, Non-Tariff, Policies and Trade Barriers, which cause unsustainable Trade Deficits against the United States,” Trump said in a letter to Carney shared on Truth Social.
Canada is already under 25% tariffs that Trump imposed months ago, although goods that comply with Trump's first-term trade agreement, USMCA, are exempt. It's not clear yet if USMCA exemptions will apply to the 35% tariffs.
In his letter, Trump noted the additional tariffs are separate from existing sectoral tariffs on steel, aluminum, and cars, which are some of Canada's most significant exports to the U.S.
Trump provided an off-ramp, demanding that Canada tighten borders to control the flow of fentanyl and lower its steep trade barriers, including high tariffs on dairy from the U.S.
U.S. tariffs could go higher than 35% or lower, depending on Canada's response, he said.
"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," Trump wrote in his letter.
The Aug. 1 date for the 35% tariffs overlaps with Trump's deadline to negotiate a new trade deal with Canada.
Trump had paused trade talks with Canada in June over its plans for a tax on U.S. technology companies. Under pressure, Carney dropped the tax.
In response to Trump's latest threats, Carney said he would defend Canada's economy while working to resolve Trump's concerns about drugs crossing the border.
"We are committed to continuing to work with the United States to save lives and protect communities in both our countries," he said.
Canada isn't the only country to get a letter from Trump, who is threatening to raise tariffs on two dozen countries unless they reach deals by Aug. 1.
