US President Donald Trump escalated a trade war by boosting the tariff rate from 25% to 35%, saying that Canada had “failed to cooperate” in curbing the flow of fentanyl and other drugs across the US border. The Canadian government says it is cracking down on drug gangs.
However most goods from Canada will dodge the import tax imposed by the US thanks to an existing trade treaty, the United States-Mexico-Canada Agreement (USMCA).
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Trump also announced sweeping tariffs on dozens of countries, as he continued his drive to remake global trade.
Canadian Prime Minister Mark Carney has said he is “disappointed” by an increased tariff on some exports to the United States.
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Economists and financial analysts have warned that the new levies will raise prices for businesses and consumers in the US and weigh on the economy, predictions that the Trump administration has dismissed.
White House press secretary Karoline Leavitt told reporters on Thursday that Trump was “proving the so-called economic experts wrong at every turn”.
“What we are watching is President Trump rebuilding the greatest economy in the history of the world,” she said.
Most countries affected by the so-called “reciprocal” tariffs will have seven days before they kick in.
Goods that are loaded onto ships by 7 August and those that are already in transit will also not be affected by the rates if they reach the US before 5 October.
Published by the White House, the orders leave most goods coming into the US facing new import taxes of between 10% and 50%.
Few nations have been spared in the latest list of tariff rates. Even small economies like Vanuatu and Papua New Guinea in the Asia-Pacific region were issued 15% duties.
Countries not mentioned on the list face baseline duties of 10%.
The headline new tariff for Canada seems severe but nearly 90% of Canadian goods imported into the US are exempted under the free trade deal.
That includes fresh produce, energy exports and many industrial goods, according to the Royal Bank of Canada.
However, some imports like dairy products, wood and leather may still face tariffs depending on how talks shape up.
The decision, contained in an executive order, increases the tariff rate from 25% and came into effect at 00:01 US Eastern time (05:01 BST) on Friday.
As the clock ticked towards Trump’s Friday deadline to strike trade deals, he announced goods from Mexico would be charged at current rates for another 90 days, avoiding a similar threatened increase from 25% to 35%.
