Trump Shocks Canada with 35% Tariff Hike – Trade War Explodes!
Ottawa, Canada – August 1, 2025, 01:56 PM +03 –
The trade relationship between the United States and Canada took a dramatic turn today as President Donald Trump signed an executive order, raising tariffs on Canadian goods from 25% to 35%. The new rule kicked in at midnight US East Coast time (05:01 BST), sending shockwaves through Canada’s economy and sparking fears of a full-blown trade war. This bold move comes just hours before Trump’s self-imposed deadline to strike trade deals with various countries, leaving many wondering what’s next.
The decision, announced late Thursday, targets all Canadian products not covered by the US-Mexico-Canada Agreement (USMCA). The White House pointed to Canada’s alleged failure to stop fentanyl smuggling as a key reason, a claim Canadian Prime Minister Mark Carney quickly dismissed.
Carney stated that Canada accounts for just 1% of US fentanyl imports and has already taken steps to strengthen border security. Despite this, Trump’s administration pushed ahead, with Commerce Secretary Howard Lutnick suggesting the tariff could be reconsidered if Carney “turns on the charm” and drops any retaliation plans.
Canada, which sends about 75% of its exports to the US, is feeling the pinch. The tariff hike will hit industries like steel, aluminum, and automobiles hard, especially for goods outside the USMCA. However, around 90% of Canadian exports to the US are still protected under the trade deal, offering some relief.
Still, the move has left Canadian businesses worried. The Royal Bank of Canada noted that companies are already diversifying exports to lessen the blow, with exports to the US dropping from 78% to 68% over the past year.
The timing couldn’t be worse, as Canada recently announced plans to recognize a Palestinian state at the UN General Assembly in September. Trump took to Truth Social to vent his frustration, writing, “Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them.” This geopolitical stance seems to have fueled Trump’s decision, aligning with his support for Israel and opposition to moves he sees as rewarding Hamas.
Canadian leaders are not backing down. Carney expressed disappointment but vowed to focus on building a stronger domestic economy. He plans to cut internal trade barriers and boost investment, saying, “Canadians will be our own best customer.” Some provinces, like Ontario, are even pushing for a 50% counter-tariff on US goods, signaling a potential tit-for-tat escalation.
The global market felt the heat too. European stock markets dipped as news broke, with Germany’s DAX falling 1.1% and France’s CAC dropping nearly 1%. Analysts warn that these tariffs could raise prices for US consumers and slow global trade growth. The US dollar hit a two-month high, hinting at inflationary pressures ahead.
Trump, meanwhile, celebrated the move, claiming it’s making America “GREAT and RICH again.” His administration insists the tariffs will protect US jobs and reduce the trade deficit, though critics argue the costs will outweigh the benefits. With Mexico getting a 90-day reprieve and other nations facing tariffs from 10% to 41%, the world is bracing for more economic turbulence.
As the dust settles, all eyes are on how Canada will respond. Will this spark a trade war, or can diplomacy save the day? One thing is clear: the US-Canada relationship is at a crossroads.
