Canada Responds to U.S. Tariff Increase Amid Trade Tensions

In response to the recent increase in tariffs by the U.S. on Canadian goods, Canada has expressed disappointment but remains committed to the CUSMA trade agreement. Prime Minister Mark Carney emphasized the importance of protecting Canadian jobs and diversifying export markets. The Canadian government is also investing heavily in border security to combat drug trafficking. This article explores Canada's strategic response to the U.S. tariff hike and its implications for trade relations.

By Narendra Chaudhary Aug 1, 2025, 13:28 IST

Canada's Reaction to U.S. Tariff Hike

Ottawa (Ontario), Aug 1: Just hours after U.S. President Donald Trump enacted an executive order on Thursday to raise tariffs on Canadian imports from 25% to 35% effective August 1, Canada expressed its disappointment but reaffirmed its commitment to the Canada-United States-Mexico Agreement (CUSMA).

The tariff increase primarily affects products not included in the CUSMA framework.

Earlier, the White House issued a statement indicating that the tariff hike was a response to what it termed Canada's ongoing inaction and retaliatory measures, necessitating the increase to address an existing emergency.

A 40% levy will be imposed on goods rerouted through third countries to avoid these tariffs, according to a fact sheet from the White House.

This decision by the Trump Administration follows claims of Canada's continued inaction, leading to the tariff escalation just before the August 1 deadline.

In a statement shared on the social media platform X, Canadian Prime Minister Mark Carney remarked, “President Trump has declared that the U.S. will raise tariffs to 35% on Canadian exports not covered by CUSMA. Although we are disappointed by this decision, we remain committed to CUSMA, which stands as the world's second-largest free trade agreement by trading volume.”

He added, “The U.S. application of CUSMA ensures that the average tariff rate on Canadian goods remains among the lowest for all its trading partners. However, sectors such as lumber, steel, aluminum, and automobiles are significantly affected by U.S. tariffs.”

“To support these sectors, the Canadian government will take measures to safeguard jobs, enhance industrial competitiveness, promote Canadian products, and diversify our export markets,” the Prime Minister assured.

“The U.S. has justified its recent trade actions based on the cross-border flow of fentanyl, despite Canada accounting for only 1% of U.S. fentanyl imports. We are actively working to further reduce these volumes,” he stated.

“Our government is making unprecedented investments in border security to combat drug trafficking, dismantle transnational gangs, and eliminate immigrant smuggling. This includes deploying thousands of new law enforcement and border security personnel, aerial surveillance, intelligence operations, and implementing the strongest border legislation in our history.”

“We will persist in collaborating with the United States to combat the fentanyl crisis and save lives in both nations,” PM Carney concluded in his post.

“While we continue to negotiate our trade relationship with the U.S., the Canadian government is focused on what we can control: strengthening Canada.”

“The federal government, along with provinces and territories, is uniting to reduce trade barriers and build a cohesive Canadian economy. We are initiating several major nation-building projects with provincial, territorial, and Indigenous partners, which could potentially generate over half a trillion dollars in new investments in Canada.”

“Canadians will become our best customers, creating more well-paying jobs domestically as we enhance and diversify our global trading partnerships. By utilizing Canadian workers and resources, we can achieve more than any foreign government can take away,” the post concluded.