U.S. President

Donald Trump

one-upped himself on Thursday, using his social media account to release an open letter to Prime Minister

Mark Carney

threatening to impose

tariffs of 35 per cent

on all Canadian goods starting August 1.

In the letter, Trump said Canada has many tariff and non-tariff policies and

trade barriers

against the U.S. but made several claims that have been debunked repeatedly in recent months, leaving more questions than answers about what the announcement means.

Here are five things to know about Trump’s latest move in the

trade war

against Canada.

What will the 35 per cent tariff apply to?

Although Trump’s letter appeared to suggest a 35 per cent blanket tariff on all Canadian imports, a White House official later told news outlets these tariffs likely won’t impact Canadian imports that are compliant under the Canada-U.S.-Mexico Agreement (

CUSMA

).

This means only goods already facing levies of 25 per cent that are not protected under CUSMA could be tariffed by 35 per cent on August 1. Energy and potash exports to the U.S. will also remain at 10 per cent.

However, the official also cautioned that Trump has made “no final decisions” and “no final paper has been drafted” just yet.

Canada also faces additional global tariffs the U.S. imposed on steel and aluminum imports at 50 per cent, and on vehicles not built in the U.S. at 25 per cent.

Fen Osler Hampson, professor of international affairs at Carleton University, said tariffs on non-CUSMA compliant goods account for about 14 per cent of total trade between Canada and the U.S., “depending on how you do the math.”

How much will it cost us?

Mark Warner, principal counsel and trade expert at MAAW Law, said it is difficult to estimate how much the higher tariffs could cost Canada, noting that this depends on each product, its components, level of demand and whether the exporter might absorb some of the higher costs.

He gave electronics as an example of a product category under a low level of compliance with CUSMA (especially due to their use of components from Southeast Asia), making them vulnerable to higher tariffs.

“I think what’s really costing us more than anything is the issue of uncertainty,” Warner said. “I think the effect on the economy is clear, in business decisions, and … in a drag on our growth.”

Small and medium-sized manufacturers will likely be most impacted by 35 per cent tariffs, Hampson said.

It is unclear how much in tariff revenue the U.S. has collected from Canada specifically so far this year. But aggregate numbers from the U.S. Customs and Border Protection show the U.S. has collected US$108.75 billion in total duties, taxes and fees this year, as of May 31 — already more than the US$88.07 billion collected throughout 2024.

Trump said Canada financially retaliated against the U.S. Have we?

Canada did impose counter tariffs.

This began with Canada’s matching 25 per cent tariffs on $30 billion in goods imported from the U.S., including items such as alcohol, apparel, orange juice and peanut butter, announced in March.

Following additional U.S. tariffs on Canadian steel and aluminum, and later automobiles, Canada responded with 25 per cent tariffs on more U.S. imports, including steel, aluminum, non-CUSMA compliant vehicles, computers, sports equipment and more.

Trump added in yesterday’s letter that should Canada retaliate with additional tariffs, “Whatever number you choose to raise them by will be added onto the 35 per cent that we charge.”

Warner said there are two factors at play: the political side putting pressure on the Canadian government to retaliate and an economic side which says further retaliation could hurt Canadian consumers.

He is not sure what path Carney will pursue, but said there is still room for negotiation.

Yesterday, Trump also announced 50 per cent tariffs on copper imports but has not yet revealed at what date these levies will kick in.

Why is Trump bringing up fentanyl again?

In his letter, Trump claimed tariffs were originally imposed on Canada because of the U.S. fentanyl crisis and Canada’s failure to stop drugs from entering their country.

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” Trump wrote.

Carney responded on X that Canada has made “vital progress” on this front. Earlier this year, the Canadian government appointed a fentanyl czar and increased border protection to obstruct fentanyl production and trafficking, while also noting that less than one per cent of the fentanyl intercepted at the U.S. border comes from Canada.

Hampson said it is important to highlight that Trump declared a national emergency over fentanyl in order to impose tariffs on Canada, Mexico and China in the first place. Invoking this sweeping presidential power to justify tariffs may not have even been legal, as the U.S. Court of International Trade ruled in May.

Also, a July report from think tank Manhattan Institute found that large seizures along the U.S.-Canada border were “relatively rare,” calling into question “tariffs and other policies and policy justifications that treat the threat from the northern border as comparably severe.”

Warner said Trump is using fentanyl as a “red herring” to get at what he really wants: concessions on trade.

What might happen next?

Both governments have been in talks over a new security and economic deal since early May, with an initial deadline for an agreement by July 21. In response to Trump’s letter, Carney’s X post said Canada will work toward the revised deadline of August 1.

Trump appears to be seeking a trade deal similar to what the U.S. negotiated with the U.K. in May, establishing a 10 per cent baseline tariff on most imports to the U.S., Warner said. He doesn’t think the baseline tariff on Canadian imports will be as high as 10 per cent, noting there may be other concessions or changes made to the trade agreement that could impact what level the baseline tariff is set at.

“I think (we’re) recognizing that a tariff world is the new normal,” said Hampson. “The critical question now is not whether tariffs exist, but at what level they will ultimately settle.”

  • Trump’s new tariff threat hikes uncertainty for Canadian businesses
  • Trump says U.S. will impose 35% tariff on Canadian goods starting August 1

Hampson said that despite Trump’s repeated promises of “90 deals in 90 days,” very few new agreements have actually emerged in this period.

“We need to remember that Donald Trump needs trade deals as much as anyone else.”

• Email: slouis@postmedia.com