Trump Plans 35% Tariff Hike on Canada  07/11 06:05

   President Donald Trump said in a letter that he will raise taxes on many 
imported goods from Canada to 35%, deepening a rift between two North American 
countries that have suffered a debilitating blow to their decades-old alliance.

   WASHINGTON (AP) -- President Donald Trump said in a letter that he will 
raise taxes on many imported goods from Canada to 35%, deepening a rift between 
two North American countries that have suffered a debilitating blow to their 
decades-old alliance.

   The Thursday letter to Canadian Prime Minister Mark Carney is an aggressive 
increase to the top 25% tariff rates that Trump first imposed in March after 
months of threats. Trump's tariffs were allegedly in an effort to get Canada to 
crack down on fentanyl smuggling despite the relatively modest trafficking in 
the drug from that country. Trump has also expressed frustration with a trade 
deficit with Canada that largely reflects oil purchases by America.

   "I must mention that the flow of Fentanyl is hardly the only challenge we 
have with Canada, which has many Tariff, and Non-Tariff, Policies and Trade 
Barriers," Trump wrote in the letter.

   The higher rates would go into effect Aug. 1, creating a tense series of 
weeks ahead for the global economy as recent gains in the S&P 500 stock index 
suggest many investors think Trump will ultimately back down on the increases. 
But stock market futures were down early Friday in a sign that Trump's wave of 
tariff letters may be starting to generate concern among investors.

   In a social media post, Carney said Canada would continue to work toward a 
new trade framework with the U.S. and has made "vital progress to stop the 
scourge of fentanyl."

   "Through the current trade negotiations with the United States, the Canadian 
government has steadfastly defended our workers and business," Carney said.

   While multiple countries have received tariff letters this week, Canada -- 
America's second largest trading partner after Mexico -- has become something 
of a foil to Trump. It has imposed retaliatory tariffs on U.S. goods and pushed 
back on the president's taunts of making Canada the 51st state. Mexico has also 
faced 25% tariffs because of fentanyl, yet it has not faced the same public 
pressure from the Republican U.S. president.

   Carney was elected prime minister in April on the argument that Canadians 
should keep their "elbows up." He has responded by distancing Canada from its 
intertwined relationship with the U.S., seeking to strengthen its links with 
the European Union and the United Kingdom.

   Hours before Trump's letter, Carney posted on X a picture of himself with 
British Prime Minister Keir Starmer, saying, "In the face of global trade 
challenges, the world is turning to reliable economic partners like Canada." 
Implied in his statement was that the U.S. has become unreliable because of 
Trump's haphazard tariff regime, which has gone through aggressive threats and 
reversals.

   When Carney went to the White House in May, the public portion of their 
meeting was cordial. But Trump said there was nothing the Canadian leader could 
tell him to remove the tariffs, saying, "Just the way it is."

   Daniel Beland, a political science professor at McGill University in 
Montreal, said Trump's latest move will make it more difficult for Canada and 
the U.S. to reach a trade deal, Beland said.

   "It doesn't mean a new trade deal between Canada and the United States is 
impossible, but it shows how hard it is for the Canadian government to 
negotiate with a U.S. president who regularly utters threats and doesn't appear 
to be a reliable and truthful interlocutor," he said.

   Trump has sent a series of tariff letters to 23 countries. Those form 
letters became increasingly personal with Canada as well as a Wednesday note 
that put a 50% tariff on Brazil for the ongoing trial of its former President 
Jair Bolsonaro for trying to stay in office after his 2022 election loss. Trump 
was similarly indicted for his efforts to overturn his 2020 election loss to 
Democrat Joe Biden.

   Trump administration officials have said that Trump was seeking to isolate 
its geopolitical rival China with the tariffs, but the latest tariffs have 
undermined that message. Brazil's largest trading partner is China, not the 
U.S., and Chinese government officials have framed his import taxes as a form 
of bullying.

   "Sovereign equality and non-interference in internal affairs are important 
principles of the U.N. Charter and basic norms governing international 
relations," said Mao Ning, the Chinese Foreign Ministry spokesman. "Tariffs 
should not be used as a tool for coercion, bullying and interference in the 
internal affairs of other countries."

   The letters reflect the inability of Trump to finalize the dozens of trade 
frameworks that he claimed would be easy to negotiate. Shortly after unveiling 
his April 2 "Liberation Day" tariffs, a financial market selloff caused Trump 
to announce a 90-day negotiating period during which a 10% baseline tariff 
would be charged on most imported goods.

   But Trump has indicated that the 10% tariff rates are largely disappearing 
as he resets the rates with his letters.

   "We're just going to say all of the remaining countries are going to pay, 
whether it's 20% or 15%," Trump said in a phone interview with NBC News.

   Trump has announced trade frameworks with the U.K. and Vietnam, as well as a 
separate deal with China to enable continued trade talks. Trump jacked up 
import taxes on Chinese goods to as much as 145%, but after talks he has said 
China faces total tariffs of 55%.

   In June, Trump said he was suspending trade talks with Canada over its plans 
to continue its digital services tax, which would hit U.S. technology 
companies. A few days later, talks resumed when Carney rescinded the tax.

   Under the current tariff structure, the 2020 United States Mexico Canada 
Agreement has protected eligible goods from Trump's tariffs. But a review of 
the pact is scheduled for 2026.