President Donald Trump is once again ratcheting up trade barriers with one of America's largest trading partners. On Thursday, the president announced a 35 percent tariff on all Canadian goods not covered by the United States-Mexico-Canada Agreement (USMCA) to take effect on August 1, unless a trade deal is reached before then. A White House official has said that the USMCA exemption is subject to change, reports The Wall Street Journal. If Trump's tariffs go into effect without USMCA exemptions, over $100 billion of Canadian energy imports a year may be subject to increased tariffs, harming not only American consumers but domestic manufacturers.
Trump sent a letter to Canadian Prime Minister Mark Carney on Thursday evening, which was subsequently shared on Truth Social, announcing his new tariff framework. The letter blames Canada for "having financially retaliated against the United States" after America implemented tariffs on Canada "to deal with [America's] Fentanyl crisis." As a consequence of Canada's retaliatory tariffs, the U.S. will "charge Canada a Tariff of 35% on Canadian products sent into the United States." Trump stipulated that there would be no tariffs if Canada or Canadian companies "decide[d] to build or manufacture product within the United States."
Canada imposed 25 percent tariffs on $30 billion worth of American imports on March 4 in response to American tariffs of 25 percent on Canadian goods and 10 percent on Canadian energy resources—despite the USMCA guaranteeing zero-tariff trade in energy products—and critical minerals from the country. Since then, the U.S. has invested billions of dollars to boost domestic manufacturing of critical minerals and reduce its dependency on Chinese sources. The second phase of these Canadian tariffs was scheduled to include another $125 billion of American goods on March 25. While this second phase of tariffs was paused, Canada extended 25 percent tariffs to $29 billion worth of steel and aluminum products and American automobiles on March 13 and April 9, respectively, according to Blakes, an international law firm based in Canada.
