Tariffs in Canada: What’s The Latest?

The trade war between the United States and Canada is grinding through a new phase.

On July 31, 2025, U.S. President Donald Trump signed an Executive Order increasing the tariff on some Canadian goods from 25% to 35%.

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Trump cited "fentanyl" and Canada’s "retaliatory trade measures" as justification for the higher levies, which went into effect August 1.

RBC estimates that around 6% of Canadian goods shipped to the U.S. are not CUSMA-compliant.

With so few goods impacted, Canadian negotiators are under no pressure to sign an agreement that harms the country’s economy. Proposing terms that satisfy Trump could be difficult, as his rationale for not striking a deal is hard to pin down.

“While we will continue to negotiate with the United States on our trading relationship, the Canadian government is laser focused on what we can control: building Canada strong,” Prime Minister Mark Carney wrote in a statement.

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The future of the trade war is anyone’s guess. Here’s what we know for sure.

A tariff timeline

Why is the U.S. imposing tariffs on Canada?

A country may put tariffs into place for a variety of reasons, such as:

Trump's justification for the tariffs has mostly focused on the "flow" of fentanyl and undocumented immigrants into the U.S. from Canada — claims that have little statistical basis but have been somewhat useful as a bargaining chip.

"The United States has justified its most recent trade action on the basis of the cross-border flow of fentanyl, despite the fact that Canada accounts for only 1% of U.S. fentanyl imports and has been working intensively to further reduce these volumes," Carney stated on August 1.

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Canada's retaliatory tariffs

The Department of Finance has published a complete list of American goods now subject to counter tariffs (taxes Canadians will pay for goods imported from the U.S.).

The searchable database has over 1,800 entries, including:

Based on inflation data from Statistics Canada, Canadian tariffs on U.S. goods may be leading to increased costs for consumers. In June, furniture, clothing and both new and used vehicles saw their prices increase.

How could these tariffs affect you?

Whatever the intention, tariffs often have negative consequences for consumers — in both countries involved.

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The potential effects of Trump’s tariffs on Canada include:

Canada exports billions of dollars in goods and services to the United States each day.

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If demand for those goods were to suddenly dry up because American companies don’t want to pay tariffs, it could have dire consequences for the economy — including recession.

"Canadian economic activity has slowed considerably because of the trade conflict but is showing signs of resilience," the Bank of Canada wrote in its July Monetary Policy Report.

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"Inflation is near 2%, although underlying price pressures have picked up. With uncertainty about U.S. trade policy still high, the outlook for the Canadian economy remains clouded."

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Tariff basics you should know

At their simplest, tariffs are taxes applied to goods that are imported from a foreign country. Tariffs aren’t new, in fact, nearly all developed countries impose some kind of tariff.

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There are a few main types:

Who pays tariffs?

Tariffs are paid by the companies who import foreign goods — not the exporting countries.

The U.S. companies that import Canadian goods will pay the tariffs announced by Trump. Canadian companies will pay the tariffs maintained by Carney.

Companies often raise their prices to offset the cost of tariffs. In these cases, consumers might wind up “paying for” the tariffs, but they don’t literally pay the tariffs themselves.

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This story will be updated as events progress.