Trump announced a 35% tariff on Canadian goods: related to drugs and retaliatory actions?

U.S. President Trump announced on Thursday that a 35% tariff will be imposed on goods imported from Canada starting August 1, citing retaliatory measures taken by Canada in response to U.S. tariffs and issues related to the influx of the drug fentanyl. This measure contrasts sharply with the previous efforts of both countries to restart trade negotiations and adds more uncertainty to the future of bilateral economic and trade relations.

Trump issues a statement criticizing Canada's "retaliatory tariffs actions"

Trump published an open letter to Canadian Prime Minister Mark Carney on his social media platform Truth Social, accusing Canada of choosing retaliation instead of cooperation. He wrote: "Canada chose not to cooperate with the United States but rather imposed retaliatory tariffs."

Trump emphasized that the U.S. tariffs are not unfounded, but rather a direct response to Canada's actions. He further warned that if Canada continues to take retaliatory measures, U.S. tariffs will be increased further.

Tariffs linked to fentanyl: Cooperation is the only way to find negotiation space.

In the letter, Trump also connected the fentanyl issue with tariff policies. He stated, "If Canada collaborates with me to stop the influx of fentanyl, we may consider adjusting this tariff policy." This statement indicates that Trump is using the fight against drugs as a bargaining chip in trade negotiations.

Fentanyl is one of the core issues of the opioid crisis in North America. Trump had previously accused Canada of being "not cooperative enough" regarding the issue of drug influx, and used this as one of the reasons to impose a 25% tariff on Canadian goods.

The new 35% tariff will be "calculated separately" and can be adjusted upward.

Trump pointed out that the new tariff rate is 35% and "will be calculated separately from the existing industry tariffs." More notably, he also issued a threat that if Canada raises tariffs, the U.S. will directly add to the 35% base.

"If you (referring to Canada) choose to raise any tariff, then the number you increase will be added directly to our current 35% tariff." Trump wrote, with a firm and uncompromising tone.

He also warned that any attempt to transport goods through a third country to evade high tariffs will be subject to the same punitive tax rates.

The old tariff policy remains: low taxes on energy, 25% on other goods.

Earlier this year, Trump imposed a 25% tariff on most Canadian goods, also due to the fentanyl issue. However, products that comply with the United States-Mexico-Canada Agreement (USMCA) are exempt. Energy-related products currently only need to pay a 10% tariff, which is relatively low.

Therefore, the newly announced 35% will become an "additional penalty" outside the current tariff system, significantly impacting Canadian exporters.

Canada makes concessions for further negotiations, while the United States continues to strike hard.

In fact, the United States and Canada agreed to restart trade negotiations on June 29 and set a deadline to reach an agreement by July 21. According to a statement from the Canadian Ministry of Finance, the two sides only recently resumed dialogue, and one of the prerequisites for this dialogue was Canada's withdrawal of its proposal for a "digital services tax" on U.S. tech companies.

Trump once vowed that he would terminate all trade negotiations if Canada did not withdraw its tax policy targeting American tech giants. Although Canada ultimately chose to concede and stopped collecting the tax, Trump still opted to launch another tariff offensive during the negotiation process, raising doubts about the sincerity and effectiveness of the negotiations.

The direction of US-Canada relations remains uncertain, and tariffs may not be the endpoint.

Trump left a hint in the letter, stating that the future direction of U.S.-Canada relations will determine whether tariffs will be "increased" or "decreased." He mentioned that Canada has multiple "unfair trade practices" besides fentanyl, such as "non-tariff barriers" and "asymmetrical import and export restrictions," which have led to an "unsustainable trade deficit."

"Such a trade deficit not only threatens our economy but also jeopardizes our national security!" Trump emphasized.

This article Trump announces a 35% tariff on Canadian goods: related to drugs and retaliatory actions? First appeared in Chain News ABMedia.