In a dramatic move driven by accusations that Canada failed to curb fentanyl trafficking, Donald Trump announced sweeping 35% tariffs on all Canadian imports starting August 1, a decision that has sparked outrage in Ottawa and raised fears of a looming trade war between two of the world’s closest allies.

In a bold escalation of his second-term trade crusade, former U.S.

President Donald Trump sent a letter on Thursday, July 10, 2025, to Canadian Prime Minister Mark Carney announcing a sweeping new 35% tariff on *all* Canadian imports into the United States, effective starting August 1, 2025.

This dramatic move, confirmed by officials in Washington and detailed in the letter, marks the latest salvo in a high-stakes trade standoff with Canada.

Trump’s letter cut straight to the core of his rationale: Canada, he claimed, has failed to stop the flow of fentanyl into the United States. He also pointed to Canada’s previous retaliatory tariffs—particularly on dairy and poultry—as evidence of unfair trade behavior.

The new tariffs, he warned, would be enforced even more aggressively if Canada responded in kind, and they could expand to more categories if conditions worsened.

“Starting August 1, 2025, we will charge Canada a Tariff of 35% on Canadian products sent into the United States… goods transshipped to evade this higher Tariff will be subject to that higher Tariff,”

Trump wrote, making clear that companies trying to bypass the tariff through third countries would also face penalties.

Interestingly, Trump extended an olive branch amid the threats: Canadian companies that choose to relocate manufacturing or business operations to U.S. soil would be exempt.

He pledged fast-track approval for such investment shifts, stating that U.S. agencies would prioritize these cases and expedite them within weeks.

The move appears aimed at luring Canadian capital and production into American territory, further entrenching Trump’s “America First” economic platform.

Beyond Canada, Trump hinted that similar blanket tariffs—ranging from 15% to 20%—might be imposed on other countries that have not yet received formal notices.

In a recent interview, he said, “We’re just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%. We’ll work that out now,” suggesting that a global tariff wave may be imminent.

The Canadian government, caught off guard, responded quickly. Prime Minister Mark Carney issued a statement late Thursday affirming Canada’s commitment to defending its workers and businesses.

He also stressed that Canada had made “vital progress” in its fight against fentanyl trafficking.

Foreign Minister Anita Anand confirmed that behind-the-scenes negotiations were underway, with the goal of finalizing a new economic and security accord by July 21, just days before the tariffs take effect.

This comes at a crucial time for U.S.-Canada trade relations. Talks related to updating the USMCA agreement—signed in 2020 and scheduled for review in 2026—are already underway.

The introduction of sweeping tariffs now threatens to derail these discussions, putting long-term cross-border trade stability at risk.

Despite the announcement, some goods currently protected under USMCA may still be eligible for exemptions, but official clarification from trade authorities has yet to be released.

Businesses on both sides of the border are now scrambling to assess the impact, and many are preparing for cost hikes and supply chain disruptions.

Markets reacted sharply. The Canadian dollar weakened against the U.S. dollar, while American stock indexes dipped. Treasury yields edged upward, signaling broader investor uncertainty.

Companies most exposed to Canadian imports—particularly in energy, automotive, and agriculture—were among the hardest hit. Analysts warned that the move could ignite inflationary pressures and slow growth if the dispute drags on.

This announcement adds to a growing list of tariff measures Trump has launched in recent months.

Earlier this summer, he imposed a 50% tariff on copper imports and warned of additional levies targeting countries such as Brazil, Japan, South Korea, and members of the European Union.

He has branded these actions “Liberation Day tariffs,” suggesting they are aimed at reclaiming American economic independence.

Trump also decried Canada’s \$63.3 billion trade surplus with the United States, framing it as a national security issue.

“Canada is taking advantage of us, and it’s time we fight back,” he asserted, reinforcing his view that trade imbalances weaken the U.S. and empower foreign competitors.

Yet legal questions loom. A federal appeals court is scheduled to review Trump’s use of executive authority under emergency powers on July 31.

If the court rules that he overstepped legal boundaries, the tariffs could be delayed or even struck down. That decision may have major implications not just for the Canada tariffs but for Trump’s entire tariff framework.

As August 1 approaches, all eyes are now on the tense diplomatic shuttle between Washington and Ottawa. Will Canada retaliate or find a compromise? Will Trump extend similar tariffs to Europe, Asia, or Latin America?

And how will global markets absorb yet another wave of economic uncertainty? The clock is ticking—and the consequences could ripple far beyond North America.