Trump Raises Canada Import Tariffs, Extends Mexico's Existing Tariffs for 90 Days

On July 31, U.S. President Trump signed an executive order raising tariffs on Canadian goods exported to the United States from the previous 25% to 35%. The executive order took effect on August 1, but exempts goods under the United States-Mexico-Canada Agreement (USMCA) framework. Since most cross-border trade in the automotive industry between the two countries is covered by the USMCA, the new tariffs have little impact on this sector. Automobiles produced in Canada and imported into the United States are still subject to a maximum tariff of 25%, but the specific tariff rate will be reduced according to the proportion of U.S.-made components.

Image source: The White House official website

On July 31, the White House stated that Canada has "failed to actively cooperate with the United States" in combating the drug crisis and has imposed retaliatory tariffs on U.S. goods in response to U.S. trade actions. The statement emphasized: "In light of Canada's continued inaction in combating cross-border drug trafficking and its retaliatory measures against U.S. tariff policies, President Trump has decided to increase the tariff rate on Canada from 25% to 35% to effectively address the current crisis."

Canadian Prime Minister Mark Carney stated that Trump's action is disappointing, but Canada remains committed to adhering to the United States-Mexico-Canada Agreement (USMCA) while also promoting the diversification of trade partners.

Mark Carney stated in the statement: "Although under the framework of the United States-Mexico-Canada Agreement, the average tariff rate imposed by the United States on Canadian goods remains one of the lowest among all its trading partners, other sectors of the Canadian economy—including lumber, steel, aluminum, and automobiles—have been severely affected."

Carney also stated that the Canadian government has been strengthening border control with the United States, but the amount of fentanyl seized accounts for only 1% of the total illegal imports into the U.S.

On July 31, after a conversation with Mexican President Claudia Sheinbaum, Trump extended the current 25% tariff rate on Mexico for 90 days.

After the two spoke on the phone, Trump posted on social media: "The complexity of the trade agreement between the United States and Mexico is different from that with other countries, stemming both from border issues and border resources."

Mexican President Claudia Sheinbaum stated on the social media platform X, "We avoided the tariff increase scheduled for August 1," and described the call with Trump as "very smooth."

The Mexican Ministry of Economy stated that approximately 85% of goods exported from Mexico to the United States meet the origin rules stipulated in the USMCA, thereby avoiding the impact of the 25% tariff related to fentanyl.

However, Trump stated that the United States will continue to impose a 50% tariff on steel, aluminum, and copper from Mexico, and a 25% tariff on Mexican automobiles as well as goods that do not comply with the United States-Mexico-Canada Agreement (related to the U.S. fentanyl crisis).

Trump also stated on his social media platform, "In addition, Mexico has agreed to immediately eliminate many non-tariff trade barriers," but did not provide specific details.