On July 11, 2025, U.S. President Donald Trump announced a sharp rise in tariffs on Canadian goods: imports from Canada will face a 35% tariff, effective August 1, up from the current 25% level. In a letter to Canadian Prime Minister Mark Carney, Trump warned the rate could increase further if Canada retaliates.

Trump cited concerns over the flow of fentanyl from Canada and alleged trade barriers harming U.S. industries—especially the dairy sector—as justification. Canada, however, maintains that fentanyl trafficking from its territory is minimal and has taken steps to strengthen border enforcement.

The announcement comes amid expanding trade tensions. Trump also signaled plans to apply blanket tariffs of 15–20% on most other trading partners, with some sectors—such as copper—already seeing levies as high as 50%. This marks a significant escalation in protectionist trade policy under Trump's administration.

Financial markets reacted swiftly: the Canadian dollar slid more than 0.5%, while the U.S. dollar index strengthened amid investor uncertainty. The steep tariff threat complicates ongoing negotiations, as Carney had hoped to finalize a new economic and security pact with the U.S. by July 21.