President Donald Trump Threatens New Tariffs On Canada

On July 10, President Donald Trump sent a letter to Canadian Prime Minister Mark Carney threatening to impose 35 percent tariffs on most Canadian goods if the prime minister’s government does not agreed to a trade deal that addresses tariffs placed on U.S. dairy products and until Canada addresses the flow of illegal drugs across the Canada-United States border. The new tariff rate would be separate from all other tariffs, which means the 50 percent Section 232 tariffs on steel and aluminum imports and the 25 percent tariff on auto imports would remain in place as well.

In the wake of President Trump’s announcement, the Canadian government paused its plans to put into place retaliatory tariffs on goods coming into the country from the United States. (Read more about that decision at this link.) President Trump had threatened to raise the tariff rates above 35 percent if Canada retaliated. The penalties are set to take effect Aug. 1, 2025. According to The Financial Post, Trump administration officials have said the tariffs are not likely to apply to goods that comply with the United States-Mexico-Canada Agreement (USMCA), but that no decisions have been made.

Two weeks after President Trump sent the letter, he conceded the United States may not reach a trade deal with Canada. Read more at this link.

In related news: the Trump administration asked the U.S. Supreme Court to decline to hear a case challenging the president’s authority to issue tariffs under the 1977 International Emergency Economic Powers Act (IEEPA). As readers may recall, this past spring, President Trump issued the following tariffs citing his authority under the IEEPA:

• 10 percent baseline tariffs for most countries;
• Reciprocal tariffs totaling between 20 percent and 50 percent on approximately 65 trading partners with which the United States runs trade deficits; and
• The 25 percent fentanyl tariffs on products from Canada and Mexico and the 20 percent fentanyl tariff on products from China.

The Trump administration argued it is premature for the Supreme Court to consider the case and that lower courts should finish their deliberations on this matter before the highest court in the land considers the challenge. Read more about this case at this link, and stay tuned to Connecting the Dots for updates as this story progresses.