The US president, Donald Trump, has threatened to put a 35% tariff on Canadian goods starting on August 1. This threat has caused concern among people in Canada. People are wondering what will happen to commerce between the US and Canada after this news. As part of a larger plan to gain an advantage in trade talks, Trump also hinted at blanket tariffs on several trade partners, including the European Union. What does this signify for the future of the economies of both countries, because they are both about to miss their trade deadline?
What does Trump mean when he says he would put a 35% tax on Canadian goods?
Trump wrote a letter on his social media site, Truth Social, saying that he will put a 35% tariff on Canadian goods unless Canada meets specific conditions. These requirements include stopping the flow of fentanyl into the US and fixing the trade imbalance between the two countries. Trump’s letter also suggested that Canadian companies may avoid the penalty if they choose to create or make things in the US. This threat of tariffs is different from the duties that are already in place for some industries, such as aluminum, steel, and cars. Here is the link to our article on Tax Deadline Fines
What Will Canada Do About These Tariffs?
Mark Carney, the Prime Minister of Canada, has quickly responded by saying that Canada will keep protecting its businesses and workers. Carney said that Canada had made a lot of progress. His administration demonstrated a strong commitment to collaborating with the US to combat fentanyl trafficking. Despite the tense situation, Canada has already imposed counter-tariffs on the US in response to previous tariffs and has indicated that additional counter-tariffs will be implemented if Trump proceeds with the 35% tariff.
How will this affect trade between the US and Canada?
The 35% tariff declaration makes it even harder for the US and Canada to reach a trade deal. After talking during the G7 Summit, both countries wanted to reach a new deal by July 21. It doesn’t look like a full agreement will be reached by the deadline because the US keeps putting tariffs on Canadian exports. Canada also just got rid of a tax on US IT businesses, which some people think is part of a bigger negotiation tactic. The tariffs might hurt commerce between the two countries, especially in industries like steel, aluminum, and cars, which are already severely taxed. Here is the link to our article on Trump’s Tariffs
Could Trump’s tariffs start a bigger trade war?
Trump’s threats aren’t only aimed at Canada; the US president has also said he aims to put comparable duties on the EU and other trading partners. This might cause a bigger trade war, which could make things worse and have an effect on markets around the world. Canada and other countries that Trump has targeted with his policies may respond by putting up heavy tariffs. The possibility of a full-blown trade war worries people on both sides of the border about what it would mean for the economy.
Final Thoughts: What Will Happen Next with Trade Between the US and Canada?
The 35% duty on Canadian goods that is coming up is just the latest sign of how tense commerce between the US and Canada is getting. With the deadline for a new trade deal coming up, what both countries do will be very important for how they get along in the future. It’s not clear yet if this threat of a tariff is just a way to get the other side to agree to a deal or if it would lead to a bigger trade fight. In the next several weeks, Canada will have to prove that it can defend its economy and deal with US worries about fentanyl trafficking.
