Canada's Response to Trump's Tariff Increase: A Commitment to CUSMA

In response to President Trump's recent decision to raise tariffs on Canadian goods, Prime Minister Mark Carney has expressed disappointment while reaffirming Canada's commitment to the CUSMA trade agreement. The tariff increase, which affects products outside the agreement, has prompted Canada to focus on protecting jobs and enhancing industrial competitiveness. Carney emphasized the importance of building a strong Canadian economy and reducing trade barriers, while also addressing the ongoing fentanyl crisis. This article delves into Canada's strategic response and future plans amidst escalating trade tensions with the U.S.

By Narendra Chaudhary Aug 1, 2025, 11:39 IST

Canada Reacts to U.S. Tariff Hike

Ottawa: Following the recent executive order signed by U.S. President Donald Trump, which raised tariffs on Canadian goods 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 retaliation, necessitating this measure to address an existing emergency.

Additionally, a 40% levy will be imposed on goods rerouted through third countries to avoid these tariffs, as outlined in a White House fact sheet.

This decision by the Trump Administration was prompted by what it described as Canada’s continued lack of action, leading to the tariff increase ahead of the August deadline.

In a statement shared on the social media platform X, Canadian Prime Minister Mark Carney remarked, 'President Trump has announced that the United States will increase its tariffs to 35% on Canadian exports not covered under CUSMA. While we are disappointed by this action, we remain committed to CUSMA, which is the second-largest free trade agreement globally by trading volume.'

'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,' he added.

'To protect Canadian jobs, the government will take measures to 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 reduce these volumes further.'

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

'We will continue collaborating with the United States to combat the fentanyl crisis and save lives in both nations,' PM Carney stated in his post.

'While we will persist in negotiations regarding our trade relationship with the U.S., the Canadian government is focused on what we can control: building a robust Canada.'

'The federal government, along with provinces and territories, is uniting to reduce trade barriers and foster a single Canadian economy. We are initiating 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 strengthen and diversify our global trading partnerships. By utilizing Canadian workers and resources, we can achieve more than any foreign government could take away,' the post concluded.