Trump Hits Canada with 35% Tariff

The latest twist in the off-on trade war with Canada comes after the key trading partner rescinded its digital services tax to advance broader trade negotiations with the U.S. as it works toward an economic deal ahead of a July 21 deadline.

A stable economy and strong financial markets appear to have emboldened the president to push harder on his natural preference for tariffs, as Axios' Neil Irwin noted this week.

Canada is the most significant trading partner of the more than 20 countries to receive a tariffs threat letter this week from Trump, who told NBC News Thursday he plans to have levies of 15% or 20% on most trading partners.

The North American neighbor was the third-biggest source of U.S. goods imports last year ($413 billion) and the top destination for exported United States goods ($349 billion), per Census Bureau data.

"When taking into account both goods and services trade, Canada was the second-largest U.S. trade partner in 2024," according to a congressional report.

Trump has repeatedly blamed Canadian officials for allowing fentanyl to cross the border into the U.S. even as data shows that less than 1% of fentanyl seized in the United States last year entered through Canada.

Meanwhile, Canadian officials have blamed the U.S. for a flood of illegal guns into Canada.