Trump targets Canada with 35 per cent tariffs, but the sting has gone

Washington: US President Donald Trump has fired another tariff salvo at northern neighbour Canada, telling Prime Minister Mark Carney he will impose a 35 per cent tax on all Canadian imports from August 1.

Steel and aluminium, which figure prominently among those imports, will continue to be levied at 50 per cent, and all other sectoral tariffs remain the same.

Canadian Prime Minister Mark Carney with Donald Trump at the G7 summit in June.Credit: AP

The announcement came in a letter to Carney published by Trump on social media – one of two dozen letters the US president has signed and made public this week as he increases pressure on trading partners before the new August deadline.

“If for any reason you decide to raise your tariffs, then, whatever the number you choose to raise them by, will be added onto the 35 per cent that we charge,” he warned.

Trump reiterated his frustration about the drug fentanyl being trafficked over the Canadian border, even though it accounts for less than 1 per cent of fentanyl arriving in the US, according to most estimates.

The US is Canada’s largest trading partner, and the two countries, along with Mexico, are part of a free trade agreement, the USMCA, that Trump renegotiated during his first term. A 35 per cent tariff, which exceeds the originally slated 25 per cent rate for Canada, would be debilitating to trade.

But Trump’s tariff threats have ebbed and flowed so chaotically that they no longer carry the same sting, nor engender the same fear. Carney, who was elected partly on a platform of standing up to Trump on trade and tariffs, reacted calmly, posting on X that current negotiations would continue.

“The Canadian government has steadfastly defended our workers and businesses,” he said. “We will continue to do so as we work towards the revised deadline of August 1.”

This round of tariffs had been slated to begin on July 9, after Trump paused them for 90 days in April after the sharemarket tanked and yields on US Treasury bonds spiked.

Clearly, with three weeks until the purported start date, the letters are meant to pile pressure on recipients to come scurrying back with better offers.

But the market reaction says everything about how Trump’s tariff threats are regarded these days: while once they would have crashed, the major indexes all rose this week, even as Trump released letters to major trading partners such as Japan and South Korea.

Notably, the letters were sent by the White House, not the US trade representative, and bore the hallmarks of Trump’s round-the-clock social media posts: randomly capitalised words, exclamation marks and his beloved postscript: “Thank you for your attention to this matter!”

One letter, to Bosnia and Herzegovina leader Željka Cvijanović, initially addressed her as “Her Excellency” but then misgendered her as “Mr President”.

Brazil, initially slapped with a tariff of 10 per cent, now faces a rate of 50 per cent, partly due to Trump’s anger that far-right former president Jair Bolsonaro is on trial for plotting a coup.

The letter also incorrectly refers to the US trade deficit with Brazil, when in fact, the US has a trade surplus of $US7.4 billion ($11.2 billion).

In an interview with NBC News, Trump used this week’s market reaction – or non-reaction – as proof that his tariffs “have been very well received”.

He also hinted at blanket tariffs of 15 or 20 per cent on “all of the remaining countries”. Currently, the lowest rate is 10 per cent, including for Australia.

But there is also a legal cloud hanging over these so-called reciprocal tariffs.

In May, a federal trade court ruled them unlawful, finding Trump had wrongly justified them using emergency economic powers. The government has appealed, and the appeals court has allowed the tariffs to remain in place until that case is heard.

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