U.S. to Impose 35% Tariff on Canadian Goods

U.S. to Impose 35% Tariff on Canadian Goods Amid Growing Trade Tensions

In a major escalation of trade tensions, President Trump announced that the United States will impose a 35% tariff on Canadian-origin goods starting August 1, 2025. The decision, shared via social media late on July 10, was justified by the administration as a response to several concerns: the flow of illicit fentanyl across the northern border, Canadian tariffs on U.S. dairy, and ongoing non-tariff trade barriers.

Until now, Canadian goods had been subject to a 25% tariff under IEEPA (International Emergency Economic Powers Act) provisions, with specific rates of 10% for energy and potash, and exemptions for USMCA-qualifying goods. However, it remains unclear whether the new 35% tariff will be replaced or be added on top of the existing 25% IEEPA tariffs.

Key Uncertainties

As of now, the U.S. government has not issued formal documentation or clarification about:

  • Whether USMCA-eligible goods will remain exempt
  • Whether there will be exemptions for U.S.-origin content
  • If the new 35% tariff completely replaces the 25% fentanyl-related tariff or is a separate layer
  • Trade experts and industry stakeholders are closely watching for updates from U.S. Customs and Border Protection and the Administration.

Canada’s Response

In response to the announcement, Canada has suspended a planned tariff hike of its own. Ottawa was previously set to double its retaliatory tariffs on U.S. steel and aluminum (from 25% to 50%) on July 21. However, following receipt of the U.S. tariff letter, Canada paused its plan and returned to the negotiating table.

Copper Tariffs on the Horizon

The U.S. Administration also revealed that a new 50% Section 232 tariff on copper imports will be imposed on August 1. Though formal documentation is still pending, the measure is being framed as essential for protecting critical sectors such as:

  • Semiconductors
  • Aerospace and defense systems
  • Data centers and batteries
  • Missile and hypersonic technologies

It’s likely that copper derivatives will be included in this action, given their role in the original Section 232 investigation by the U.S. Department of Commerce.

What Else to Expect?

President Trump signaled that not all countries will receive country-specific tariff letters, but baseline tariffs, currently 10%, could be increased to 15% or 20% for most non-specified countries. No formal action has been published on this yet.