Just the Facts: Trump’s 35% Canadian Tariff and Canada’s Response

With just days remaining before President Trump’s self-imposed deadline to strike a new trade deal with Canada, no agreement appears imminent. What began as a tense negotiation has metastasized into a full-blown economic standoff, marked by dueling tariffs, political bravado, and waning diplomatic grace.

On July 16, Prime Minister Mark Carney unveiled a sweeping steel tariff package designed to insulate Canada’s domestic industry from global volatility. His remarks were blunt:

“Canada is no longer content to be a passive participant in global steel dynamics. We’re forging a new path—and doing so with steel in our spine.”

This escalation in rhetoric and action marks a turning point. Two countries once bound by mutual interest and proximity are now behaving more like adversaries than allies.

Canada’s Tariff Measures Include:

• A 25% tariff on steel “melted and poured” in China.
• Tariff rate quotas (TRQs) capping duty-free access to 50% of 2024 levels for non–FTA countries.
• A $1 billion CAD innovation fund to modernize domestic steel production.
• Procurement reforms prioritizing Canadian-origin steel for public infrastructure.

The Trump administration has responded with a blanket 35% tariff on Canadian goods beginning August 1. This is an increase from the previous 25%. While USMCA-compliant products remain exempt, the tariff targets key sectors such as autos, steel, and aluminum. Trump justified the move by accusing Canada of insufficient action on fentanyl trafficking and persistent trade barriers.

Though the final outcome remains unsettled, both countries are already feeling the impact.

• Tourism and cross-border commerce have slowed dramatically—traffic into New York from Canada is down 21% year-over-year, impacting local economies across the region.
• In Canada, patriotic campaigns urging consumers to “buy Canadian” have surged in response to rising prices and deteriorating trade relations.

The tariff landscape has shifted dramatically since Trump took office. Prior to 2025, Canada’s tariffs on U.S. goods were largely consistent with WTO and NAFTA norms, focused on select sectors like agriculture, dairy, and poultry under its supply management system. Specifically, prior to January, U.S. tariffs on Canadian goods were:

• Steel & Aluminum: In 2018, 25% on steel and 10% on aluminum under Section 232 (national security grounds).
• Softwood Lumber: Longstanding duties tied to recurring disputes.
• Dairy Restrictions: Applied through NAFTA provisions rather than formal tariffs.

And Canadian tariffs on U.S. goods were primarily:

• Dairy: Tariffs ranging from 200–300% on milk, cheese, and butter.
• Poultry & Eggs: High tariffs on chicken, turkey, and egg imports.
• Grain Products: Modest tariffs, though protective in principle.

These measures were designed not to antagonize, but to preserve domestic stability through managed trade frameworks.

Whether the stability can be maintained as both Trump and Carney maneuver for economic and electoral purposes remains unclear.

Trump’s tariffs serve as a showcase of strength for his base, redirecting attention from domestic challenges while asserting leverage abroad, and Carney, by contrast, blends progressive economic vision with strategic restraint. His assertive yet measured response is designed to defend Canadian interests while preserving diplomatic optionality.

What’s playing out isn’t just a trade dispute. It’s a collision of ideologies, temperaments, and national identities.

The tariff question is quickly becoming a test of the broader North American compact that has stood for decades, touching on not just economics but the fabric of political, military, and corporate interdependence that defines the region.

David Nevins is co-publisher of The Fulcrum and co-founder and board chairman of the Bridge Alliance Education Fund.