Trump says he will hit Canadian imports with a 35% tariff in major escalation of trade war

President Donald Trump announced Thursday that the United States would apply a 35% tariff to all imports from Canada beginning next month, reviving tensions with a major trade partner that had largely dissipated in recent weeks.

“Instead of working with the United States, Canada retaliated with its own Tariffs,” Trump wrote in the letter shared on Truth Social. “Starting August 1, 2025, we will charge Canada a Tariff of 35% on Canadian products sent into the United States, separate from all Sectoral Tariffs.”

Until this escalation, Canadian imports that did not fall under the U.S.-Mexico-Canada trade agreement, which Trump negotiated in his first term, faced a tariff of 25%. Energy imports from Canada faced tariffs of 10%.

Trump told NBC News in an interview earlier Thursday that he would announce a new tariff rate for Canada before the end of the week.

Canada is one of the United States’ top trading partners, with more than $410 billion of goods crossing into the country last year. However, the two countries have had a fraught trading relationship since Prime Minister Mark Carney took office in March.

In late June, Trump announced he had terminated all trade talks with Canada, citing its digital services tax, which was set to be imposed by June 30.

Canada retaliated, imposing a quota on some steel imports and a 50% surcharge for imports that exceed the quota. Canada’s finance minister said the government was acting to protect its industry from “unjust U.S. tariffs.”

Trump’s letter Thursday may come as a surprise to Carney, though. After he rescinded Canada’s digital services tax to appease Trump on June 29, the two leaders spoke on the phone and agreed to work toward a trade deal by July 21.

Trump called the digital services tax an “attack” on the United States and its tech giants. The tax would have applied to any tech firm making more than $15 million from Canadian internet users. A lobby group for some large U.S. tech companies said it would have forced them to pay as much as $3 billion on June 30.

In his social media post Thursday night, Trump said that if Canada retaliates again, the United States will hike the 35% tariff higher.

Canada’s top trade negotiator and its ambassador to the United States said this week that Canadian and American teams were in near-daily contact and working toward an agreement.

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” Trump wrote at the end of his letter. “You will never be disappointed with the United States of America.”

Canada has said Trump’s claims that large amounts of fentanyl are coming across the northern border are “unjustified.”

U.S. stock futures immediately slid on Trump’s post, with the S&P 500 index indicated to drop about a half-percent at Friday’s opening bell. Dow Jones Industrial Average futures were set to drop more than 200 points.