Overview

• President Trump signed an executive order July 31 raising tariffs on Canadian goods from 25% to 35% beginning August 1, with USMCA-compliant products exempted.
• A 40% transshipment levy will apply to Canadian goods rerouted through third countries to deter tariff evasion.
• The administration cited record fentanyl seizures at the northern border and alleged Canada-based “super labs” as justification for escalating trade measures.
• In a separate order, Trump revised reciprocal tariff rates for dozens of other trading partners, set to take effect within seven days to address U.S. trade deficits.
• Canadian officials maintain that under 1% of cross-border fentanyl originates in Canada and have highlighted domestic enforcement steps while pursuing further trade talks.