Canada Faces 35% Tariff on Exports to the US Starting August 1

Strategic Insights -

US President Donald Trump warned Canada that it will face a 35% tariff on exports to the US starting August 1, casting doubt on the trade negotiations between the two countries. This threat comes just as Canada and the US are working to reach a deal by July 21, with the goal of saving the free trade agreement known as the USMCA. The US-Mexico-Canada Agreement, which replaced the previous NAFTA accord in July 2020, has been under review since January, with Trump accelerating the process after launching his trade wars. The Canadian and Mexican governments are scrambling to find ways to satisfy Trump's demands and save the agreement.

Key Takeaways:

  • US President Donald Trump warned Canada that it will face a 35% tariff on exports to the US starting August 1.
  • The tariff threat comes just as Canada and the US are working to reach a deal by July 21 to save the USMCA.
  • The US-Mexico-Canada Agreement replaced the previous NAFTA accord in July 2020 and is currently under review.
  • Canadian and Mexican products, including potash, used as fertilizer, were initially hit with 25% US tariffs and received a lower rate after Trump announced exemptions under the USMCA.
  • Trump has targeted Canada and Mexico for not doing enough on illegal immigration and the flow of illicit drugs across borders.
  • Canada and the US had warming relations after Canadian Prime Minister Mark Carney met with Trump in the Oval Office on May 6 and at the G7 summit in Canada last month.

Statistics:

  • 35%: Tariff rate that Canada will face on exports to the US starting August 1.
  • 20+: Number of letters issued by Trump since Monday threatening tariffs against dozens of economies.
  • 25%: Initial US tariff rate on Canadian and Mexican products.
  • 1: The number of a month and a week left for Canada and the US to reach a deal by July 21 to save the USMCA.
  • 2020: The year in which the US-Mexico-Canada Agreement replaced the previous NAFTA accord.

Sources:

  • (Alliance News) - Canada will face a 35% tariff on exports to the US starting August 1, President Donald Trump said Thursday in a letter to Prime Minister Mark Carney. It was the latest of more than 20 such letters issued by Trump since Monday, as he continues to pursue his trade war threats against dozens of economies.