Canada’s prime minister Mark Carney said Friday, August 1, his government is “disappointed” by President Donald Trump’s decision to increase US tariffs on Canadian goods to 35%.
The US leader had warned of trade consequences for Ottawa after Carney announced plans to recognize the State of Palestine at the 80th Session of the United Nations General Assembly in September 2025.
The move leaves the United States increasingly isolated from some of its closest allies on the issue of Israel and how it has conducted its military campaign.
US president Donald Trump blasted Canada’s decision, threatening to derail ongoing trade talks with Ottawa.
“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,” wrote Trump in its social platform Truth Social.
Mark Carney made the announcement on Wednesday and said that Canada has “long been committed to a two-state solution” that would see an independent Palestinian state “living side by side with the State of Israel in peace and security.”
It’s only the latest escalation in a dramatic on-and-off trade war with the US’s closest trading partner.
The White House noted Trump signed an executive order on Thursday to increase the tariff from 25% to 35%, with the higher tariff set to go into effect on August 1, 2025, in an effort to hold Canada accountable for its role in the flow of fentanyl and other illicit drugs into the U.S.
“In March, the President determined that Canada had failed to adequately address the situation and proceeded with the imposition of the 25% tariff. Now, President Trump is taking further action to hold Canada accountable for its continued role in the illicit drug crisis,” the White House said in a fact sheet on July 31.
Carney outlined Ottawa’s efforts to crack down on fentanyl and to increase border security. “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. Canada’s government is making historic investments in border security to arrest drug traffickers, take down transnational gangs, and end migrant smuggling,” he said.
Ottawa remained committed to the CUSMA, which is the world’s second-largest free trade agreement by trading volume, the prime minister said.
“The U.S. application of CUSMA means that the U.S. average tariff rate on Canadian goods remains one of its lowest for all of its trading partners,” he pointed out. “Other sectors of our economy – including lumber, steel, aluminum, and automobiles – are, however, heavily impacted by U.S. duties and tariffs. For such sectors, the Canadian government will act to protect Canadian jobs, invest in our industrial competitiveness, buy Canadian, and diversify our export markets.”
The statement continued to defend Canada’s commitment and efforts to resolve the drug issues facing both the US and Canada.
He claimed that he was ‘disappointed’ by Trump and said his government will focus on making ‘Canada Strong.’
He added: “Canadians will be our own best customer.
“We can give ourselves more than any foreign government can ever take away by building with Canadian workers and by using Canadian resources to benefit all Canadians.”
