Canada's Prime Minister Mark Carney has vowed to protect Canadian workers and industries after US President Donald Trump signed an executive order raising tariffs on Canadian goods to 35% from 25%.
“While the Canadian government is disappointed by this action, we remain committed to CUSMA, which is the world’s second-largest free trade agreement by trading volume,” Carney said in a statement posted on Bluesky. “For such sectors, the Canadian government will act to protect Canadian jobs, invest in our industrial competitiveness, buy Canadian, and diversify our export markets.”
My statement on Canada-U.S. trade:
— Mark Carney (@mark-carney.bsky.social) 1 August 2025 at 05:28
The hike applies to all Canadian exports not covered by the US-Mexico-Canada trade agreement, meaning sectors like lumber, steel, aluminium, and automobiles will take the brunt of the increase.
The move came as part of a sweeping tariff package unveiled by Trump just hours before an August 1 deadline for global trade deal talks expired. The new executive order includes a 10% global minimum tariff and sets duties of 15% or more for countries with trade surpluses with the US, such as 39% for Switzerland and 20% for Taiwan.
“Much of the rhetoric and the negotiation are now behind us and we'll now see how the rubber hits the road,” said Deutsche Bank strategist Jim Reid. “The US tariff rate has risen to about 15% from a little over 2% at the start of the year. That’s their highest level since the 1930s but that has not prevented US equities from being near their all-time highs.”
Trump’s order includes a technical delay on most tariffs until August 7, potentially leaving room for last-minute deals. But the rise on Canadian goods took immediate effect, singling out America’s northern neighbour despite its trade pact status.
Trump separately announced a 90-day extension in talks with Mexico, which will continue to face tariffs of 25% on non-USMCA goods and 50% on steel and aluminium during the window. In return, Mexico agreed to scrap non-tariff trade barriers with immediate effect.
Meanwhile, legal challenges are also underway. A US Court of Appeals began hearings on whether Trump’s use of emergency powers to impose broad tariffs is lawful. On Truth Social, Trump warned that without tariff authority, “the country would be dead, with no chance of survival or success.”