United States President Donald Trump announced Thursday (Friday AEST) that a sweeping 35% tariff on all Canadian imports will take effect on 1 August, marking a sharp escalation in trade tensions between two of the world’s most integrated economies.
The move, delivered via a letter to Canadian Prime Minister Mark Carney and posted on Trump’s Truth Social platform, cited Canada’s alleged failure to curb fentanyl trafficking, retaliatory tariffs, and longstanding trade imbalances as justification.
Trump warned that any Canadian countermeasures would trigger proportional increases, stating, “Whatever the number you choose to raise them by, will be added onto the 35% that we charge”.
Global luxury investors face multifaceted implications.
Canada was the third-largest source of U.S. imports and the top buyer of U.S. exports in 2024, with bilateral trade exceeding $762 billion annually.
The tariff threatens to disrupt supply chains in key sectors including automotive, energy, and high-end consumer goods, potentially inflating costs and dampening demand.
Canadian Finance Minister Chrystia Freeland has defended Ottawa’s retaliatory actions, including steel quotas and surcharges, as necessary to protect domestic industry.
Meanwhile, U.S. markets reacted swiftly: S&P 500 futures fell 0.5%, and the Dow dropped over 200 points in after-hours trading following the announcement.
Canada’s response is expected to be firm but measured.
Prime Minister Carney has not yet issued a formal reply, though officials have hinted at retaliatory tariffs on U.S. auto exports and consumer goods.
Canadian premiers and business leaders have called for a “Team Canada” approach, emphasising unity and strategic countermeasures.
Analysts warn that a prolonged tariff war could shave up to 1.1% from Canada’s GDP, with ripple effects across North American luxury markets and investor sentiment.
As negotiations stall, luxury investors are advised to monitor developments closely, particularly in sectors vulnerable to cross-border friction.
