WASHINGTON, TORONTO. U.S. President Donald Trump has signed an executive order increasing tariffs on Canadian goods to 35 percent from the previous 25 percent for all products not covered by the U.S.-Mexico-Canada Agreement (USMCA), the White House announced Thursday.
According to a White House fact sheet, goods transshipped through other countries to evade the new tariff structure will face a 40 percent transshipment levy. The White House said the decision is partly due to Canada’s “continued inaction” on stopping the flow of fentanyl into the United States, a claim Canadian officials have repeatedly pushed back on.
The move marks another escalation in the months-long tariff dispute initiated by Trump shortly after taking office. Trump warned that any country failing to reach a trade deal with the U.S. before the August 1 deadline would face increased duties. He said Canadian Prime Minister Mark Carney had reached out before the deadline, but no direct talks occurred.
Canadian officials maintain that only a very small portion of fentanyl entering the U.S. originates from Canada. Nonetheless, measures have already been taken to strengthen border control and enforcement. Carney stated earlier this week that trade negotiations with the U.S. had been constructive, but were unlikely to conclude before the deadline. He also noted that a deal removing all U.S. tariffs remains improbable.
Canada, a key trading partner of the U.S., sends approximately 75 percent of its exports south of the border. Economists say the Canadian economy has remained resilient despite ongoing trade pressures and is not expected to slip into recession.
Ontario Premier Doug Ford, whose province contributes around 40 percent of Canada’s GDP, called for a strong response. “Canada shouldn’t settle for anything less than the right deal. Now is not the time to roll over. We need to stand our ground,” Ford wrote on social media, urging Ottawa to impose a 50 percent counter-tariff on U.S. steel and aluminum imports.
Trump, in a separate statement, said he “loved Canada” but accused it of treating the United States “very badly” for years. U.S. Commerce Secretary Howard Lutnick suggested the president could reconsider the tariffs if Carney changes his approach and reduces retaliatory measures.
Meanwhile, Trump granted Mexico a 90-day window to finalize a trade deal, temporarily avoiding a threatened 30 percent tariff. Mexico will still face a 25 percent tariff on non-USMCA-compliant exports to the U.S., which Trump linked to concerns about drug and human trafficking.
Canadian government data shows that the share of exports going to the U.S. declined from 78 percent in May 2024 to 68 percent in May 2025. The decrease was largely due to a drop in automobile, steel, and aluminum exports. Still, around 90 percent of Canadian goods entering the U.S. in May were USMCA-compliant, as more companies adapt to avoid penalties.
Carney said in June that if a deal was not reached by August 1, Canada would likely impose additional retaliatory tariffs targeting U.S. steel and aluminum products.
Edgardo Hernal started college at UP Diliman and received his BA in Economics from San Sebastian College, Manila, and Masters in Information Systems Management from Keller Graduate School of Management of DeVry University in Oak Brook, IL. He has 25 years of copy editing and management experience at Thomson West, a subsidiary of Thomson Reuters.
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