The White House has moved forward with a steep 35% tariff on Canadian imports not covered under the USMCA, igniting renewed trade friction just as both countries enter a final round of negotiations. The measure, which includes additional penalties for transshipped goods, signals a hardening U.S. stance amid wider tariff rollouts across multiple trading partners.
Non-USMCA Goods Face Higher Costs
A newly signed executive order by President Donald Trump imposes a 35% tariff on Canadian imports that fall outside the scope of the United States-Mexico-Canada Agreement (USMCA), effective August 1. The order also escalates penalties for companies attempting to circumvent the tariff via transshipment, hiking the duty to 40% in such cases.
The move marks a continuation of Trump’s recent tariff push, which includes sweeping actions against dozens of countries. While tariffs on many nations were delayed to August 7, the Canada-specific measure remains on track for an earlier August 1 implementation.
Imports that qualify under USMCA terms will continue to be exempt from these duties. But the executive order reinforces that goods not meeting USMCA criteria, many of which have faced a 25% tariff since March, will now be subject to the new 35% rate. The language of the order directly references prior Canadian retaliatory tariffs and lingering disputes over U.S. dairy access, steel, and fentanyl-linked shipments as contributing factors.
Canada Responds With Levies of Its Own Amid Ongoing Talks
Canadian Prime Minister Mark Carney confirmed his country’s commitment to continued negotiations ahead of the deadline. “We will continue to defend our workers and businesses,” Carney said on X, reiterating Canada’s stance as bilateral discussions enter a critical stretch.
In recent months, Canada has mirrored several U.S. tariffs, applying duties on American steel, aluminum, autos, and select consumer goods. These countermeasures were in response to the Biden-era Section 232 steel and aluminum duties, which Trump’s administration has opted to retain and expand.
While the executive order offers clarity on timing, it leaves room for administrative confusion. Trade experts have questioned how the 35% rate will be enforced in practice, particularly for mixed-origin goods or those with unclear compliance documentation. “The lack of implementation detail is going to tie up a lot of customs brokers and trade compliance teams,” one industry consultant noted in a post on LinkedIn.
The tariff’s scope also coincides with renewed pressure on U.S. firms that rely on Canadian inputs for just-in-time manufacturing and seasonal imports. From auto parts and pulp to fertilizer and food products, the new duties threaten to compress margins in supply chains already navigating volatile costs and post-pandemic demand shifts.
An Overlooked Risk: Canada’s Leverage on Critical Minerals
While much of the current tariff focus centers on finished goods, Canada remains a key source of critical minerals vital to U.S. energy and tech sectors. Nickel, cobalt, and rare earth elements used in electric vehicles, batteries, and defense applications are among Canada’s highest-value exports, and largely excluded from the tariff action.
But experts warn that escalating tensions could eventually push Canada to reassess its role in North America’s critical mineral strategy, particularly as it accelerates partnerships with the EU and Asia. If trade conflict spills into these high-stakes supply chains, the cost could extend far beyond tariffs, and directly undercut U.S. ambitions for supply chain resilience and clean energy independence.