KEY POINTS
- Trump announces Canadian import levy moving up to 35% on Aug. 1
- President says failure to stem fentanyl smuggling, trade retaliation drove the decision
- U.S. investment markets all moved down on Friday after recent hitting recent records
President Donald Trump continued his streak of social media tariff announcements this week, sharing a screenshot Thursday evening of a letter to Canadian Prime Minister Mark Carney announcing goods coming into the U.S. from its northern neighbor will be subject to a 35% trade levy starting Aug. 1.
The new rate marks an uptick from the previous 25% levy on Canadian imports but continues the policy of exempting goods covered under the United States-Mexico-Canada Agreement negotiated during Trump’s first term in office. The new fee on Canadian goods is separate from previously implemented sectoral tariffs that include 50% import fees on steel and aluminum and 25% on automobiles.
In his letter to Carney, Trump called out Canada for retaliating to his previous tariff hike and failing to adequately address the flow of fentanyl across the U.S.-Canada border.
What Canada had to say
Carney took to social media to respond to Trump’s latest tariff decree, arguing his country is making inroads on the illegal drug trade and is ready to work with the U.S. to iron out trade policy issues.
“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” Carney wrote in a posting to X on Thursday. “We will continue to do so as we work towards the revised deadline of August 1. Canada has made vital progress to stop the scourge of fentanyl in North America. We are committed to continuing to work with the United States to save lives and protect communities in both our countries.”
Earlier this week, the president also announced a 50% tariff on copper imports would go into effect on Aug. 1, a decision Trump made after receiving what he described as a “robust national security assessment.”
“Copper is necessary for Semiconductors, Aircraft, Ships, Ammunition, Data Centers, Lithium-ion Batteries, Radar Systems, Missile Defense Systems, and even, Hypersonic Weapons, of which we are building many,” Trump wrote in a Truth Social posting on Wednesday. “Copper is the second most used material by the Department of Defense.”
Canada tariff news hits harder
While U.S. investment markets mostly shrugged off Trump’s nearly two dozen tariff announcements earlier in the week, and the S&P 500 hit a new record high on Thursday, major stock indexes were in the red on Friday, and headed for a week in the loss column, as the trade tussle with the country’s top trading partner hit a little harder with investors.
“This has been a week thus far where the rising rhetoric around trade didn’t adversely affect markets,” Art Hogan, chief market strategist at B. Riley Wealth Management, told CNBC. “Investors were able to look through that to a certain extent, but the order of magnitude with one of our most important trade partners that just got dumped in our laps overnight was an eye opener.”
Some analysts are suggesting the lack of market response earlier in the week is a result of the so-called TACO trade mentality. TACO, an acronym for “Trump Always Chickens Out”, reflects a stance taken be some investors that market dips driven by the president’s tariff declarations have consistently been ironed out by subsequent walk-backs or delays of new trade levy announcements.
“At the end of the day, no one really anticipates most of these tariffs will go into effect. The TACO trade is still the market’s expectations,” Ed Mills, Washington policy analyst at Raymond James, told CNN on Wednesday.