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Donald Trump has said the US will impose a 35 per cent tariff on Canada at the start of August as he launches a fresh salvo against one of the country’s largest trading partners.
The US president sent a letter to Canada late on Thursday, following an interview in which Trump warned EU nations to expect a tariff announcement targeting the bloc “today or tomorrow”. He said countries that had not received a letter from him would face tariffs of 15-20 per cent.
“We’re just going to say all of the remaining countries are going to pay, whether it’s 20 per cent or 15 per cent. We’ll work that out now,” Trump told NBC News. Trump’s “reciprocal” tariffs are currently set at 10 per cent.
An administration official said the tariffs on Canada would “likely” be waived for goods that complied with the terms of Trump’s 2020 trade agreement with Canada and Mexico, but said “no final decisions” had been made. Such an exemption could significantly blunt the damage of the higher tariff.
The interventions marked the latest twist in a turbulent week in which Trump has escalated his global trade war, threatening tariffs on more than 20 countries, along with imminent levies of 50 per cent on copper.
The president cited the lack of a big, adverse market reaction to the latest round of tariffs, after US equities closed at record highs on Thursday. “I think the tariffs have been very well received. The stock market hit a new high today,” Trump told NBC.
The Canadian dollar slid as much as 0.6 per cent against its US counterpart before recovering its losses. North American index futures edged down, with those tracking the US S&P 500 down 0.6 per sent and Canada’s benchmark S&P/TSX 60 losing 0.4 per cent.
Steep tariffs on Canada would have wide-ranging economic consequences. Trade between the two countries reached more than $760bn last year, according to US customs data. Many North American businesses have heavily integrated supply chains with parts for finished products, such as cars, often crossing the border repeatedly.
Trump has given countries until August 1 to reach deals on tariffs. He had originally set a deadline of July 9 to reach agreement on the “liberation day” tariffs announced in April.
Along with Mexico, Canada was one of the first countries Trump hit with tariffs after retaking office in January. He accused the US’s closest neighbours of failing to control illegal migration and trade in the opioid fentanyl.
Canada has had close to tariff-free trade on many goods, and a 25 per cent tariff on any products that do not comply with the US-Mexico-Canada Agreement. Canadian oil and energy products face a lower tariff of 10 per cent.
The US’s northern neighbour has also benefited from a carve-out on 25 per cent auto parts tariffs, but it has been hit by the full 50 per cent tariff on all steel and aluminium products.
Trump’s move heaps pressure on Canadian Prime Minister Mark Carney, who won a federal election in April on the promise that he would stand up to the US president and use his experience as a central bank governor to steer his country through the economic turmoil unleashed by tariffs.
Trump’s letter returns to his complaints about “the flow of fentanyl” across the US-Canadian border, as well as Canadian treatment of US dairy.
Late on Thursday, Carney posted on social media that the Canadian government would work towards a revised deadline of August 1. “Canada has made vital progress to stop the scourge of fentanyl in North America,” Carney wrote.
Carney this month dropped a digital services tax that had attracted Trump’s ire for targeting US technology companies, as the prime minister tried to smooth over trade tensions — prompting criticism from opponents.
“Carney gave up the pretence of standing up to Trump a while ago,” said Dan Nowlan, who was an adviser in former Conservative prime minister Stephen Harper’s government.
Additional reporting by William Sandlund in Hong Kong
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