Trump Escalates Trade Tensions With Canada and Eyes Global Tariff Hikes

President Donald Trump intensified his confrontational trade agenda late Thursday by announcing a proposed 35% tariff on Canadian imports, potentially deepening an already volatile relationship with one of the United States’ most crucial trading partners. The decision is part of a broader push by Trump to reset trade relations across the board, which also includes threats of increased blanket tariffs on most other nations.

It remains unclear whether the Canadian tariffs will apply to all imports or only to a specific subset of goods already subject to duties. What is clear is that the tariffs are scheduled to take effect on August 1 unless an agreement is reached in time. Ottawa has responded cautiously, with Prime Minister Mark Carney stating that Canada will continue defending its economic interests and workers as trade talks with Washington continue toward the July 21 deadline.

The Canadian response followed a wave of formal letters sent by Trump to world leaders, notifying them of new tariff rates set to kick in next month. Trump is reportedly pushing nearly two dozen countries to negotiate bilateral trade deals - or face higher tariffs. Canada, which imported $349 billion in American goods last year and exported $413 billion worth to the U.S., stands to lose significantly if mutual tariffs take hold.

Blanket Tariffs and Global Signals

Trump told NBC’s “Meet the Press” that countries not yet addressed in individual trade letters will face uniform tariff hikes of up to 20%, doubling the existing 10% blanket rate on nearly all foreign imports. “We’re just going to say all of the remaining countries are going to pay,” Trump said, leaving the final rate to be determined. He dismissed concerns about the potential inflationary effects of these moves and pointed to record stock market gains as proof of market confidence.

Trump’s tariff declarations coincided with a record high for the S&P 500. However, past reactions to similar moves have included sharp sell-offs; when Trump first introduced global tariffs in April, the index suffered one of its steepest drops in history.

Meanwhile, Trump rejected corporate concerns, notably from Hasbro’s CEO, who warned of rising toy prices. Trump replied he wasn’t aware of the comments and insisted that U.S.-based production would shield companies from price increases. “If they made their toys here, they wouldn’t have a price increase,” he said.

Long-Running Canada Disputes

Canada has been a frequent target of Trump’s trade ire, even before he resumed office. In November 2024, Trump proposed a 25% tariff on Canadian and Mexican imports to combat fentanyl trafficking and unauthorized immigration. Although initially delayed, those tariffs were partially implemented in March, exempting only goods compliant with the US-Mexico-Canada Agreement (USMCA).

Since then, Trump has floated multiple tariff threats against Canadian products, including lumber and dairy. He’s accused Canada of exploiting trade advantages, particularly citing their steep tariffs - up to 250% - on U.S. dairy exports. While Trump pledged to match such tariffs “dollar-for-dollar,” the measures were never enacted.

Last month, Canada averted a new round of U.S. tariffs by indefinitely postponing a planned digital services tax that would have disproportionately affected U.S. tech firms. This move was widely viewed as an attempt to keep trade talks alive.

The list of goods currently affected includes steel, aluminum, and automobile parts - core exports for Canada. Trump has placed 50% tariffs on non-compliant steel and aluminum imports and 25% duties on automotive components not covered under USMCA. Canada has responded in kind, targeting U.S. vehicles and billions of dollars’ worth of consumer goods.

Fentanyl and National Security

In his Thursday letter announcing the latest tariff plans, Trump again cited fentanyl as a justification. However, U.S. data shows that only a tiny fraction - just 0.2% - of fentanyl seized in fiscal year 2024 came from Canada. Trump offered a possible reprieve, saying tariffs “may be modified” if Canada assists further in blocking fentanyl traffic.

Carney responded by emphasizing Canada's commitment to fighting the fentanyl crisis and pointed to recent policy steps, including the appointment of a Fentanyl Czar and new border enforcement measures introduced under former Prime Minister Justin Trudeau.

Conservative leader Pierre Poilievre slammed the tariffs, calling them “unjustified” and harmful to both economies. “Canada has long been a reliable partner and trusted friend to the United States,” he said, warning of damage on both sides.

The NATO-Ukraine Arms Deal

Alongside the trade announcements, Trump also unveiled new arrangements regarding U.S. weapons transfers to Ukraine. In an NBC interview, he claimed that NATO had agreed to fully reimburse the U.S. for all weapon shipments destined for Ukraine. “We’re sending weapons to NATO, and NATO is paying for those weapons, 100%,” he said, adding that the deal was finalized at last month’s NATO summit.

The specifics of the arrangement remain vague, and it is not clear whether Trump was referencing a previously floated proposal whereby NATO members would collectively purchase American arms for Ukraine.

The announcement came days after a brief freeze on weapon deliveries by the Defense Department, a move that reportedly surprised much of the Trump administration. Trump distanced himself from the delay, saying he was unaware of the pause but expressed confidence in Defense Secretary Pete Hegseth.

Trump also hinted at a “major statement” on Russia to be made soon. While offering no details, he expressed disappointment in Russia’s recent escalation, particularly a deadly strike on Kyiv, and signaled potential policy shifts in the coming weeks.

Europe, Retaliation, and More Letters

As Trump prepares to send out additional tariff letters to major partners - including the European Union - E.U. officials have been trying to stave off new duties. Maroš Šefčovič, the bloc’s top trade negotiator, stated that active talks are underway “every single day” to avoid getting targeted.

The E.U. has prepared over $100 billion in retaliatory tariffs, many of which are strategically aimed at goods from politically significant U.S. states - such as soybeans and bourbon.

Trump told NBC he expected to finalize letters to both the E.U. and Canada “today or tomorrow.” Shortly after that statement, he confirmed the 35% tariff on Canadian goods.

Domestic Politics and the “One Big Beautiful Bill”

On the domestic front, Trump also touched on the recent passage of the “One Big Beautiful Bill Act,” a sweeping policy package combining tax cuts, military funding boosts, and major reductions in Medicaid and environmental spending. Trump signed the law on July 4 after months of wrangling with Congress.

The bill maintains Trump-era tax cuts, introduces new exemptions for overtime and tip income, and injects hundreds of billions into border enforcement and military programs. The tradeoff: deep cuts to social safety net programs.

Though Democrats have attacked the bill - calling it a betrayal of working-class voters - Trump appeared unconcerned. “They said that about 2024, too,” he quipped, brushing off criticism.

Trump said he would consider touring the country to promote the bill, but added, “It’s been received so well I don’t think I have to.”