In a letter dated Thursday, July 10, 2025, U.S. President Donald Trump announced plans to impose a 35% tariff on many imported goods from Canada, significantly escalating trade tensions between the two long-time allies. The move deepens a growing rift in the North American partnership that has endured for decades.
The letter, addressed to Canadian Prime Minister Mark Carney, marks a sharp increase from the 25% tariff rates first imposed in March. At the time, Mr. Trump cited the need to curb fentanyl trafficking, despite minimal smuggling of the drug from Canada. He also expressed concern over the U.S. trade deficit with Canada — a gap largely attributed to America’s oil imports.
“I must mention that the flow of Fentanyl is hardly the only challenge we have with Canada, which has many Tariff, and Non-Tariff, Policies and Trade Barriers,” Mr. Trump wrote in the letter, framing the tariffs as a response to broader trade grievances.
The increased tariffs are set to take effect on August 1, creating weeks of uncertainty for global markets. Although recent gains in the S&P 500 suggest investor confidence that Mr. Trump may ultimately reverse the decision, the looming implementation has already sparked concern.
Canada, the United States’ second-largest trading partner after Mexico, has responded with retaliatory tariffs and sharp rebukes of Mr. Trump’s rhetoric — including his past suggestion of making Canada the “51st state.” Unlike Mexico, which also faces 25% tariffs over fentanyl-related concerns, Canada has received significantly more public pressure from the U.S. administration.
Prime Minister Carney, elected in April on a platform emphasizing Canadian independence and assertiveness, has taken steps to reduce Canada’s dependence on U.S. trade. He is actively working to build closer ties with the European Union and the United Kingdom. Just hours before receiving Trump’s letter, Carney posted a photo with British Prime Minister Keir Starmer, stating, “In the face of global trade challenges, the world is turning to reliable economic partners like Canada” — a thinly veiled critique of Trump’s erratic trade policies.
While the May meeting between Carney and Trump at the White House appeared publicly cordial, Trump reportedly told Carney that there was nothing he could say that would persuade him to lift the tariffs. “Just the way it is,” Trump remarked.
Carney has maintained a calm and diplomatic tone, suggesting that trade issues will require time and dialogue to resolve. “There are much bigger forces involved,” he said, “and this will take some time and some discussions.”
Trump’s letter to Canada is part of a broader campaign. He has sent similar tariff letters to 23 countries. Notably, a separate letter this week announced a 50% tariff on Brazil, targeting the nation’s handling of former President Jair Bolsonaro’s trial. Trump himself faces similar legal scrutiny over efforts to overturn the 2020 U.S. election results.
These tariff letters underscore the Trump administration’s struggle to finalize trade deals that were once promised to be easily negotiated. His April 2 “Liberation Day” announcement introduced a 10% baseline tariff on most imports, followed by a 90-day negotiation window. However, with the latest letters, those 10% rates are giving way to a more aggressive tariff reset strategy.
As August 1 approaches, all eyes are on whether President Trump will stand by the 35% tariff hike or yield to mounting diplomatic and market pressures.
