US-Canada Tariff Dispute Intensifies as Trump Announces 35% Tariff; Canadian Dollar Falls

TradingKey - Following the introduction of a comprehensive 50% tariff on Brazilian imports, President Donald Trump has further heightened trade tensions by declaring on his social media platform, Truth Social, that a 35% tariff will be imposed on Canadian imports starting August 1. This move is perceived as a notable escalation in the US-Canada tariff situation.

On the 10th, Trump released his tariff letter to Canadian Prime Minister Mark Carney on Truth Social. The rationale for these tariffs is Canada's insufficient efforts to curb the flow of fentanyl into the United States and its previous retaliatory tariffs against the US, instead of opting for cooperation.

Trump clarified that this 35% tariff is an additional measure, separate from industry-specific tariffs. Canada can avoid this tariff by establishing factories or manufacturing goods within the US. However, if Canada retaliates, the US will raise tariffs by a similar margin on top of the 35%. Furthermore, any attempts by Canada to circumvent this tariff by rerouting goods through other countries will face equivalent punitive rates.

Despite the increase in tariff tensions, Trump has not ruled out the possibility of improving US-Canada relations. He mentioned that if Canada cooperates with the US to stem the flow of fentanyl, the US might reconsider adjusting this tariff policy, with future rates contingent on bilateral relations development.

After Trump's tariff escalation announcement regarding Canada, the USD/CAD exchange rate briefly surpassed the 1.37 mark, reaching a new high since July before slightly retreating. The market is closely monitoring the evolving US-Canada trade negotiations.

[USD/CAD, source: TradingKey]