Trump Threatens 35% Tariff on Canadian Exports, Escalating Trade Tensions Ahead of USMCA Deadline
U.S. President Donald Trump has announced a sweeping 35% tariff on Canadian exports to the United States, effective August 1, in a letter addressed to Canadian Prime Minister Mark Carney—a move that could further disrupt North American trade negotiations under the USMCA framework.
The letter, issued Thursday, is one of more than 20 similar warnings sent by Trump this week alone as he intensifies his revived trade war campaign, targeting economies around the world ahead of the upcoming U.S. election cycle.
Negotiators from Canada, Mexico, and the United States have been working toward a July 21 deadline to finalize a refreshed version of the United States-Mexico-Canada Agreement (USMCA). However, Trump’s latest threat has effectively pushed that timeline back to August 1.
“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” Carney wrote Thursday night on social media platform X. “We will continue to do so as we work towards the revised deadline of August 1.”
The USMCA, which replaced NAFTA in 2020 following Trump’s demand for a renegotiation during his first term, was due for a review by mid-2026. Yet Trump’s aggressive tariff push—framed as a leverage tool to renegotiate better terms—has plunged the deal into uncertainty.
Earlier iterations of Trump’s trade strategy hit Canadian and Mexican exports with 25% tariffs, although energy exports from Canada were subject to a lower rate. At the time, Trump cited border security, illegal immigration, and fentanyl trafficking as key justifications, despite official U.S. and Canadian data showing Canada contributes less than 1% of fentanyl to the illicit U.S. supply.
Although Trump eventually issued tariff exemptions for USMCA-covered goods, Thursday’s letter suggests he may revisit those protections.
Tensions Behind the Scenes
Despite recent efforts to thaw relations — including Carney’s visit to the White House in May and cordial interactions during last month’s G7 Summit in Canada — Trump’s erratic tariff campaign continues to raise concerns.
At the G7, allied leaders had urged Trump to abandon what they view as economically damaging unilateral trade penalties. Canada, for its part, had agreed to roll back digital service taxes that affected U.S. tech firms, prompting Trump to resume trade talks.
Meanwhile, Trump also hinted in an NBC interview that blanket tariffs of 15% to 20% could be imposed on countries that have not yet received formal warning letters. Some letters, including one reportedly targeting Brazil, include tariffs of up to 50% unless new trade terms are reached before August 1.
Brazilian President Luiz Inácio Lula da Silva, responding to Trump’s warning, said Thursday he remains open to negotiations but emphasized that reciprocity measures are being considered. In his letter to Lula, Trump also criticized Brazil’s treatment of his political ally, former president Jair Bolsonaro.
As Trump continues to position trade as a central plank of his campaign messaging, economic observers warn that renewed tariff wars could rattle global markets and destabilize key trade relationships ahead of a pivotal election year.
