In a significant escalation of trade tensions, former President Donald Trump has notified 23 heads of state about new trade tariffs, particularly targeting Canada. Even Canadian officials are sounding alarms over the recent announcement. Coming on the heels of a proposed 50 percent U.S. copper import tariff, this news is unbelievably bad. Beginning August 1, an additional new 35 percent tariff will be applied on goods from Canada. Besides the indirect economic harms, there’s a risk that tariffs escalate further if Canada retaliates. This decision is supposedly a response to claims that Canada is doing too little to stop the flow of fentanyl into the U.S.
The most recent tariff actions reflect deep and continued frustrations over the trade deficit between both countries. Trump largely attributes this widening deficit to oil imports. Yet through all of this, Canada continues to enjoy a robust $63.3 billion (2024) trade surplus with the U.S. In concrete terms, recent trade figures indicate that Canada bought $349.4 billion in U.S. goods. That was in the same year Canada exported $412.7 billion of goods to the U.S.
Background and Context
The diversionary focus on Trump’s policy fits a familiar pattern. Sometime earlier in his administration, on a different whim, he slapped 30 percent tariffs on other Canadian products. In March, he floated a 25 percent tariff on all imported cars and car parts. In addition, he claims this step is essential to defend American jobs and manufacturing.
The move to impose tariffs was preceded by Canada’s condemnation of a proposed 50 percent tariff on copper, reflecting ongoing disputes over trade practices. Trump has long condemned Canada’s trade practices, most notably charging that they give unfair advantages to Canadian workers and companies to the detriment of their U.S. counterparts.
“In the face of global trade challenges, the world is turning to reliable economic partners like Canada.” – Mark Carney
With the implementation of tariffs, Trump aims to pressure the Canadian government to take stronger actions against fentanyl smuggling—a serious concern for American public health. He’s made no secret of his desire for tougher tariffs to force action out of Ottawa.
Canada’s Response
Our neighbor to the north, Canadian Prime Minister Mark Carney, has been equally as tiptoted in his opposition to trump’s tariffs. He repeats the message that Canada will not stop standing up for its workers and businesses in the face of these growing aggressions. For his part, Carney underscored the value of robust public-private partnerships. He further re-committed Canada to addressing fentanyl concerns while protecting its trading interests.
“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1.” – Mark Carney
The Prime Minister has not been shy in signalling alarm about the ulterior motives driving Trump’s trade war. He remarked that “the Americans want our resources, our water, our land, our country,” suggesting that Trump’s tariffs could be an attempt to exert control over Canadian resources.
So for now, Carney’s administration continues to work urgently for a diplomatic fix, but ready themselves for the inevitable assault from the U.S. federal government. The leadership in Canada understands that moving through this tricky terrain requires a tough disposition. What goes even further is their willingness to enter into a real discussion.
Implications for Future Trade Relations
The imposition of tariffs marks a watershed moment in U.S.-Canada trade relations. These relations have long been shaped by trade agreements, notably the United States-Mexico-Canada Agreement (USMCA). This agreement replaced the widely criticized, decades-old North American Free Trade Agreement (NAFTA). Yet, it has not completely settled all the trade conflicts between the two countries.
Taken together with other recent announcements from Trump, a larger strategy comes into focus. He hopes to introduce a new digital services tax on tech giants making billions off of Canadian users, but that effort is temporarily stalled. It embodies the new essential reality of our times, where economic policies are more and more anchored to national security and public health interests.
“We’re just going to say all of the remaining countries are going to pay, whether it’s 20 percent or 15 percent. We’ll work that out now.” – Trump
The impasse demonstrates the hard realities of international negotiations on trade. We must contend with these challenges during a period increasingly characterized by economic protectionism and nationalism. Both countries are now dealing with the fallout from those very new tariffs and their ramifications. The stakes are incredibly high for industry and consumers on both sides of the border.
