In a bold executive move on **August 1**, U.S. President Donald Trump raised tariffs on Canadian goods from **25% to 35%**—targeting all products not protected under the USMCA trade agreement. The controversial decision was justified on grounds of Canada’s perceived failure to curb fentanyl trafficking and its recent recognition of Palestinian statehood Reuters breaking update.
Prime Minister **Mark Carney** reacted forcefully: calling the hike “disappointing” and emphasizing that Canada, which contributes only **1% of fentanyl into the U.S.**, has in fact invested heavily in border security. He denounced the measure as a unilateral blow to Canadian workers and industries—and vowed retaliatory actions to protect domestic employment and diversify trade markets as he stated publicly.
Carney reaffirmed Canada’s resolve with a robust plan—continuing existing **25% counter-tariffs** on U.S. goods, investing in domestic manufacturing, promoting “Buy Canadian,” and pledging export diversification to cushion the blow. Opposition leader **Doug Ford** echoed the warning, endorsing tariffs on U.S. steel and aluminum and demanding symbolic gestures like removing American liquor brands from provincial shelves in protest as reported in internal political coverage.
Political backlash intensified when Trump linked the tariff hike to Canada recognizing Palestinian statehood, tweeting that such diplomatic decisions would make a trade deal “very hard” to achieve. Carney responded that tying foreign policy with economic punishment is unacceptable diplomacy as Reuters explained and international commentary echoed similar concern according to The Guardian’s live updates.
“This tariff hike hits Canadian workers, not their courts.” – Mark Carney
Analysts warn the higher duty will severely harm Canadian staples like **lumber**, **steel**, **aluminum**, and **autos**, many already exempt under USMCA. Additional non–USMCA goods—such as copper or luxury vehicles—will bear full cost, with a **40% transshipment fee** now in place as detailed by Reuters and highlighted in trade commentaries in the Financial Times on global impact.
Canada has postponed earlier plans to increase its own retaliatory tariffs, maintaining the status quo of 25% for now. That restraint came after Trump extended deadlines and floated a broader negotiating framework that includes Mexico and Canada as Politico summarized and reiterated by government statements in Canadian leadership messaging.
This escalation follows months of trade tension that began in **February 2025**, when Trump first enacted a global tariff on Canadian products and encouraged American consumers to boycott Canadian goods. In response, Canada retaliated with tariffs, regional leaders banned U.S. alcohol, and consumers embraced patriotic buy-Canadian movements—sparking a wave of national unity in reaction to Trump’s threats as outlined in trade war timelines and further detailed in domestic political coverage from The Guardian.
Carney pledged that Canada would protect its economy—channeling billions into worker retraining and export incentives. At the same time, provinces such as Ontario and Quebec have taken local measures, politically boycotting U.S. goods, implementing tolls on American vehicles, and recalibrating procurement policies to favor domestic suppliers as universally enforced in policy responses.
Despite Trump’s assertion that treaties won’t constrain corrective tariff use, Canada remains firm. Carney noted that Canada will push for trade agreements beyond USMCA—including with the EU, UK, and Indo-Pacific nations—to reduce reliance on unstable U.S. trade policies.
This sharp escalation—notably announced just hours before the tariff increase—marks a pivotal moment in the 2025 trade war. Canada’s Prime Minister has responded with defiance, pledging economic resilience, diplomatic accountability, and a clear message: unfair economic pressure will not relent Canada’s sovereignty.
