President Donald Trump said the US will put a 35% tariff on some imports from Canada after trade negotiations between the two countries broke down.
The new rate represents an increase from the 25% tariffs Trump imposed in early March under an emergency law.
“Canada has failed to cooperate in curbing the ongoing flood of fentanyl and other illicit drugs, and it has retaliated against the United States” for Trump’s earlier tariffs, the White House said in a fact sheet published Thursday evening.
But the US administration kept in place an exemption for goods traded under the rules of the US-Mexico-Canada trade agreement. US automakers and other companies with integrated North American supply chains had pushed for that carve-out, which has allowed US importers to continue bringing in the bulk of Mexican and Canadian products without duties.
Because of that exemption, the effective tariff rate on US imports of Canadian goods was around 5%, according to estimates published July 30 by the Bank of Canada. That will now rise slightly.
Trump’s move escalates a trade war between two longstanding allies that until this year had largely operated on a tariff-free basis since the late 1980s. The US bought around US$475 billion ($616.45 billion) of goods and services from Canada last year, while exporting approximately US$440 billion to Canada, led by vehicles, auto parts and consumer products, according to data from the US Commerce Department and Statistics Canada.
