President Trump has officially announced a 35% tariff on all Canadian imports, set to begin August 1. The declaration was made public on July 10 through a letter addressed to Prime Minister Mark Carney. The stated reason is fentanyl trafficking, with Trump accusing Canada of failing to curb the flow of synthetic opioids into the U.S. However, CBP and DEA data continue to show that over 90% of fentanyl seizures occur at the southern border. Regardless, the tariff is locked in, and the economic implications are already being assessed.
Canada exported $47.2 billion in goods to the U.S. during the first half of 2025. That includes lumber, aluminum, auto parts, beef, and pharmaceuticals. A 35% tariff across the board will hit every category. Lumber futures rose 3.2% today. Aluminum contracts climbed 2.7%. Auto suppliers in Michigan and Ohio are warning of cost spikes and potential layoffs if Canadian parts become unaffordable. Ford and GM both operate plants in Ontario. Their supply chains are now exposed.
Canada getting 35% Tariff pic.twitter.com/LYhMmMwDAz
— Tom (@TradingThomas3) July 11, 2025
The U.S. previously imposed a 25% tariff on Canadian steel and aluminum in 2018, later rolled back under USMCA. This new round bypasses that agreement entirely. Trump’s letter makes no mention of trade deficits or currency manipulation. It’s a unilateral move tied to narcotics enforcement. He wrote, “If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter.”
Ottawa has not announced retaliation. No formal countermeasures have been triggered. Canadian officials are reviewing options under the Economic Reciprocity Law, but no public statement has confirmed action. If matched, U.S. exports to Canada would face a 35% tariff. That includes agricultural equipment, aircraft parts, medical devices, and processed foods. Deere, Boeing, Medtronic, and Tyson Foods all have exposure. The U.S. exported $38.6 billion to Canada in Q1 alone.
Markets are watching. As of Thursday, July 10, Canadian financials showed modest movement. No verified closing data confirms a synchronized drop across major banks. Early trading showed mixed signals, with Royal Bank of Canada, TD, BMO, Scotiabank, and CIBC all fluctuating within a narrow range. Options volume on Canadian banks rose 14% above average. Retail stocks with Canadian exposure are also under pressure. Walmart Canada sources over 60% of its inventory domestically. That’s about to get more expensive.
This is not a symbolic gesture. It’s a full-scale tariff war between two of the largest trading partners in the Western Hemisphere. Unless something changes, the cost of doing business across the northern border is about to spike.
Sources:
https://www.usnews.com/news/top-news/articles/2025-07-10/trump-announces-35-tariffs-on-canada
https://thehill.com/homenews/5395829-trump-tariffs-canada-fentanyl/
https://www.cnbc.com/2025/07/11/trump-announces-35percent-tariffs-on-canada-starting-aug-1.html
https://ca.finance.yahoo.com/news/trump-announces-35-tariffs-canada-002314480.html