US Tariffs on Canada Raised to 35% Over Disputes

President Donald Trump raised tariffs on Canadian goods from 25% to 35%, effective August 1, 2025, citing Canada's alleged failure to curb fentanyl trafficking and its recent recognition of Palestinian statehood. The tariff increase excludes goods covered by the U.S.-Mexico-Canada Agreement (CUSMA/USMCA), which continues to permit most Canadian exports tariff-free access to the U.S. Canadian Prime Minister Mark Carney tried but failed to negotiate a delay or reduction in the tariffs prior to their implementation. The White House described the action as a response to a 'public health crisis,' but Canadian officials argue that fentanyl flows from Canada are minimal and point to increased border security efforts. Key industries such as lumber, steel, aluminum, and automobiles are expected to be hardest hit, with Carney pledging support for affected sectors and stressing the urgency of diversifying export markets. Analysts say the CUSMA exemption mitigates the overall impact but highlights the volatility of U.S. trade policy.