Canada

Canada continues trade negotiations with the United States after announcement of 35% tariffs

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As mentioned in our US customs team’s blog post, on July 10, US President Trump announced 35% tariffs on imports from Canada. The new tariffs are scheduled to commence on August 1. 

Current US tariffs on Canada include 25% tariffs on Canadian origin goods excluding US-Mexico-Canada Agreement (USMCA) qualifying goods, 10% tariffs on energy products and potash, 50% tariffs on steel and aluminum goods and derivative products, and 25% tariffs on automobiles and parts.

The August 1 Tariffs were announced ahead of the July 21, 2025 deadline set following the G7 summit for a new trade and security deal between Canada and the US. After the tariff announcement, Prime Minister Carney stated that the new deadline for the trade and security deal between Canada and the US is August 1, 2025.

The federal cabinet also convened on July 15, 2025, to discuss Canada’s response. Prime Minister Carney has publicly signaled that a “tariff-free” agreement with the United States is unlikely and acknowledged the possibility of long-term sectoral tariffs. Please see our blog post which discusses the key sectors in focus within the Canada – US trade negotiations here.

Canadian and US businesses should take note of the following:

  • The August 1 Tariffs may not apply to goods that comply with the USMCA. These exemptions would be similar to the first US tariffs on Canadian products, which came into effect on March 4, 2025.
  • The 35% tariff rate would be separate from sector-specific tariffs, including those on energy products and potash, automobiles, steel and aluminum.
  • If Canada decides to raise its tariffs in retaliation, the US has announced its intention to match any such tariff increase and add 35% to that tariff rate.
  • The August 1 tariff announcement addresses issues related to the trade deficit between Canada and the US, Canada’s counter-tariffs to the US, Canada’s tariffs on US dairy products, and the US Fentanyl crisis. While the Canadian government has announced increased investments in border security, it remains unlikely that Canada would remove trade barriers to dairy products.
  • The US has also suggested that it would impose tariffs on semi-conductors, 50% tariffs on copper, and 200% tariffs on pharmaceuticals; Although US President Trump announced via social media on July 9 that a 50% tariff would apply to copper imports regardless of origin from August 1, no letter or executive order has announced tariffs on Canadian semi-conductors or pharmaceuticals.
  • Canada has proactively implemented domestic support for the steel industry in response to existing tariffs, including tariff rate quotas for foreign producers of steel.
  • Importers and exporters should continue to monitor developments in the Canada-US trade and security negotiations to understand how supply chains may be affected by trade policies.

Special thanks to our summer student Hannah Beltran for contributing to this update

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Julia Webster is a disputes and international trade lawyer. She advises companies on trade remedies, free trade agreements, blocking measures, customs compliance, anti-corruption laws, economic sanctions, AML compliance, supply chain ethics, and cross-border M&A. Julia is a tested advocate and has significant commercial and trade litigation experience. She has appeared before the Canadian International Trade Tribunal, the Federal Court, the Federal Court of Appeal, the Ontario Superior Court of Justice and a number of administrative tribunals across Canada. She has also counseled companies on sensitive internal investigations which have included cross-border document reviews and multi-jurisdictional legal proceedings.

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Jacqueline Rotondi practices commercial, regulatory, competition and international trade law as a member of Baker McKenzie's Global International Commercial and Trade Groups. Jacqueline regularly advises clients in a variety of industries on Canadian advertising and marketing law, including advising on advertising requirements, deceptive marketing, influencer marketing, greenwashing, consumer protection, and contests and promotions. She also focuses on providing regulatory and commercial counsel to companies regulated by Health Canada. Jacqueline helps clients navigate the regulatory landscape affecting the manufacture and sale of food, drugs, natural health products, cosmetics, pest control products, and consumer products. This includes advising on licensing requirements and product recalls, and reviewing product packaging and labelling.

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Jing is an associate in Baker McKenzie's International Commercial Practice Group and the Global Antitrust & Competition Group in Toronto. Prior to joining the Firm, Jing was an associate in the Toronto office of a leading Canadian law firm. Jing has a broad commercial and regulatory practice, focusing on competition and foreign investment, international trade compliance and complex corporate and commercial contract matters.

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