US Increasing Canada Tariff to 35%; USMCA Goods Still Exempt
The U.S. is raising tariffs on Canada from 25% to 35% effective Aug. 1 because Canada has "failed to cooperate" in stopping flows of fentanyl and other illegal drugs across the border, the White House said in a July 31 fact sheet. Goods qualifying for preferential tariff treatment under USMCA will continue to be exempt from the duties, the White House said, and goods found to have been transshipped to evade the 35% tariff will face a 40% tariff.
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The tariffs, imposed under the International Emergency Economic Powers Act, are necessary "given Canada’s continued failure to arrest traffickers, seize illicit drugs, or coordinate with U.S. law enforcement and Canada’s retaliation against" previous duties announced by the Trump administration, the fact sheet said.
The White House released the fact sheet hours after Trump told reporters that his administration hadn't spoken to Canada yet that day, although he said Prime Minister Mark Carney had called.
At about 12:30 a.m. on July 31, Trump posted on social media: "Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!"
At the White House just before 5 p.m. that day, Trump said that while he doesn't like Canada's position on Palestine, "It's not a deal-breaker."
When asked what was holding up a deal with Canada, Trump replied, "Well, they have to pay a fair rate, that's all."
He complained again about Canada's tariff rate quotas for imported dairy products that his U.S. trade representative agreed to in the renegotiation of NAFTA, and said, "They've been treating us very poorly for years. All we want is fairness for our country."