US President Donald Trump hikes tariff on Canada to 35%, highest in decades, says ‘very hard’ to strike deal due to...

US President Donald Trump on Thursday signed an executive order increasing tariffs on Canadian goods to 35% from 25% on all products not covered by the US-Mexico-Canada trade agreement, effective August 1, the White House said. Goods transshipped to another country to evade the new tariffs will be subject to a transshipment levy of 40%, according to a White House fact sheet. The increased tariff, which the White House said was the result of Canada's “continued inaction and retaliation,” comes after Trump told reporters that Canadian Prime Minister Mark Carney reached out ahead of an August 1 tariff deadline, but no conversations between the two took place.

This is the highest broad-based tariff that the US has imposed on Canadian goods in the longest time. Last year, Canada was the second-biggest US trading partner as the two countries produced USD 761.8 billion from both ways.

Trump’s warning

Trump has warned that any country that does not strike a deal with the US before Friday will be subjected to higher tariffs imposed on goods. “We haven't spoken to Canada today. He's (Carney) called and we'll, we'll see,” Trump told reporters during an event at the White House before the 35% rate was announced.

The Canadian leader previously said trade talks with Washington had been constructive, but the talks may not conclude by the deadline. Talks between the two countries were at an intense phase, he added, but a deal that would remove all US tariffs was unlikely.

Trump’s allegations

Earlier on Thursday, Trump said it would be “very hard” for the US and Canada to strike a deal after Ottawa moved toward recognizing Palestinian statehood. He said later on Thursday, however, that he did not view the move as “a deal breaker” in trade talks. “Well, they have to pay a fair rate - that's all. It's very simple. They have been charging very, very high tariffs to our farmers, some over 200% and they've been treating our farmers very badly,” Trump said when asked about negotiations.

He added that while he loves Canada, it has treated the United States “very badly” for years. US Commerce Secretary Howard Lutnick said Trump could reconsider the tariff if Carney “starts turning on the charm and if he takes off his retaliation.”