In a strongly worded letter dated July 10, 2025, the White House has notified Canadian Prime Minister Mark Carney of the United States’ intention to impose a 35% tariff on Canadian products starting August 1, 2025, in response to what it calls ongoing trade imbalances and Canada’s alleged role in exacerbating the U.S. fentanyl crisis.
The letter, addressed from the President of the United States, states that while the U.S. remains committed to its trading relationship with Canada, it will no longer tolerate what it describes as financial retaliation by Canada in response to earlier U.S. tariffs.
Fentanyl Crisis Cited as Trigger
The U.S. administration argues that the fentanyl crisis in the country is being worsened by Canada’s failure to stop the flow of drugs across the border. Tariffs were initially imposed on Canada in an effort to confront this issue, but Canada responded with its own tariffs, prompting the U.S. to escalate.
“The United States imposed Tariffs on Canada to deal with our Nation’s Fentanyl crisis, which is caused, in part, by Canada’s failure to stop the drugs from pouring into our Country,” the letter states.
Tariff Details and Warnings
Under the new policy:
- A 35% tariff will be applied to all Canadian products entering the United States, separate from existing sectoral tariffs.
- Goods routed through third countries to avoid the tariffs will still be subject to the 35% rate.
- Products made in Canada but manufactured in the U.S. will not be subject to the tariff.
- The U.S. promises to expedite approvals for domestic production alternatives to Canadian goods.
Furthermore, the letter warns that if Canada chooses to raise its tariffs on U.S. goods in retaliation, the U.S. will match any increase by adding it on top of the 35% baseline.
Broader Trade Concerns
The communication also raises long-standing grievances regarding Canada’s tariff and non-tariff barriers, particularly in agriculture. It cites up to 400% tariffs on U.S. dairy products, calling the trade imbalance a threat to the U.S. economy and national security.
“Canada charges extraordinary Tariffs to our Dairy Farmers — up to 400% — and that is even assuming our Dairy Farmers have access to sell their products,” the letter reads.
The administration argues that these policies have created unsustainable trade deficits and pledged to use this opportunity to rebalance economic ties.
What’s Next
With the deadline of August 1 approaching, the announcement sets the stage for escalating economic tensions between the two nations, unless new negotiations are launched or Canada amends its trade approach.
The upcoming tariffs are expected to affect a wide range of Canadian exports and could significantly impact industries on both sides of the border.
