"We intend to negotiate in a good faith manner right up to the deadline, and we will always make sure that we defend the interests of Canadian industry, Canadian workers and Canadian jobs.
Some tariffs have already been put in place by the US on Canadian goods, ranging from a 25% levy on some products to more general ones, such as aluminium, steel and autos across the globe. While some items are exempt under the Canada-United States-Mexico Agreement (CUSMA), it is not clear whether Trump's new 35% tariff threat would supersede those exemptions.
Political Showdown Looms With Canada Tariffs; Mnuchin and Lighthizer Due on Capitol Hill
On top of the previously announced sectoral duties — including 50-per-cent tariffs on steel and aluminium imports and a 50-per-cent tariff on next month's copper orders — Trump's newest threat would be "disastrous" for Canada's metal and manufacturing industry.
"Companies can use their own lines and equipment, and just pay an import tax on goods that will be de-linked from the value of the dollar so that they are competitive," Trump said, noting that "the 35% would be removed" from other levies. He also linked the tariff decision to Canada's trade policies and fentanyl coming into the US.
Trump needled Canada for its failure to stem the tide of fentanyl into the country and returned to his familiar lament about its tariffs on U.S. dairy and the trade deficit between the two countries. He hinted that the tariffs could be modified depending on Canada's cooperation.
"If Canada comes to the table with measures to stop the flow of fentanyl, then, perhaps, we will be in a position to make an adjustment to this letter," the statement read.
Prime Minister Carney responded on social media, saying Canada is taking action to stop fentanyl from coming in and boost border security financial support. The country has also appointed a special official in charge of fentanyl issues earlier in the year. According to US authorities, only about 0.2% of all fentanyl seizures take place at the Canadian border, the overwhelming majority at the US-Mexico frontier.
"Limbo": Markets Are Waiting and Watching That, Where Trade Talks Are Concerned. As a trade-show gazillionaire, Trump has spent this week in limbo as far as trade talks are concerned.
The two men had earlier agreed at the G7 Summit in June that they would conclude a new agreement on trade and security by 21 July. But the threatened tariffs have clouded the prospects for that discussion.
Canada has already loosened up some of the tensions by removing a digital services tax on big US tech companies — something Trump was critical of in the past. Prime Minister Carney referred to the removal as a part of this overall negotiation strategy.
Trump cautioned in the letter that Canadian countermeasures would be met by further tariffs. Canada, meanwhile, has also applied its own countervailing tariffs and has already indicated that further tariffs could be coming if a deal isn't brokered before the deadline.
Businesses on both sides of the border are bracing for potential economic upheaval as the 1 August implementation deadline looms. Analysts say that despite the public huffing and puffing, both sides have time to do a deal, but the atmosphere has become very charged.
