Canada faced stark new pressures in its crucial negotiations with Washington as President Donald Trump injected the threat of sweeping new tariffs into the maneuvering over a redrawn trade relationship.

In a letter to Prime Minister Mark Carney on social media Thursday evening, Trump vowed to raise the across-the-board import taxes on U.S.-bound goods to 35% on Aug. 1, from the current 25%. He claimed this was a response to the fentanyl “pouring” into the U.S.

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter. These Tariffs may be modified, upward or downward, depending on our relationship with Your Country,” Trump wrote.

A White House official has clarified that the 35 per cent tariff would apply only to goods already subject to a 25 per cent rate. This means products compliant with the Canada-U.S.-Mexico Agreement (CUSMA), as well as energy and potash imports — which currently face a 10 per cent tariff — would be exempt.

The official also noted that no final decision has been made and no policy paper has been drafted.

In Ottawa, a Canadian government official told the Toronto Star that it remains unclear which goods the proposed tariff would target, despite U.S. media reports suggesting it would apply only to non-CUSMA goods already hit with the 25 per cent rate. The official added that there are no immediate plans for further public comment from the Canadian government.

Exporters who did not qualify have been working to meet the CUSMA requirements in recent months and it is estimated that the portion of Canadian exports entering the U.S. duty-free under CUSMA could soon reach 80%.

Fresh urgency

The latest tariff attack from the U.S. added fresh urgency to Canada’s trade negotiations with the Trump administration, which now face an Aug. 1 deadline. Previously, Trump and Carney had agreed to reach a new trade deal by July 21.

Replying in a post on X, Carney defended Canada’s record, saying the country has “made vital progress to stop the scourge of fentanyl” in North America and is committed to working with the U.S.

“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” Carney added. “We will continue to do so as we work towards the revised deadline of August 1.”

Carney continued: “We are building Canada strong. The federal government, provinces and territories are making significant progress in building one Canadian economy. We are poised to build a series of major new projects in the national interest. We are strengthening our trading partnerships throughout the world.”

Earlier, Trump threatened 50% tariffs on copper, raising concerns in the Canadian copper sector, which exports half its production to the U.S. worth $4.8 billion annually.

U.S. financial markets, which have recently taken Trump’s protectionist onslaught in stride, lost ground in initial trading on Friday following the latest threat against Canada.

In addition to the new 35% across-the-board import fee and the threatened tariffs on copper, Canada has already been hit with stiff tariffs on aluminum, steel, autos and all U.S.-bound exports that do not comply with CUSMA rules.

There is a growing belief among experts that Canada may be forced by Trump to accept some level of across-the-board import fees. This is what occurred in the U.S.’s recent preliminary trade agreement with the United Kingdom, which included 10 per cent tariffs on imports from the UK.

Horne smelter

A steep U.S. copper tariff could be felt in particular in Quebec, the location of the Horne Smelter in Rouyn-Noranda – the only copper smelter in the country – and the Canadian Copper Refinery (CCR) in Montreal East.

“Of course, this is worrisome, but at the same time, we have to keep a cool head because there are lots of changes and lots of negotiations at play," Jean-Denis Charest, CEO of the Chamber of Commerce in Montreal East, told the Financial Post. He said the layoffs in the steel and aluminum sectors caused by Trump’s increased tariffs on those sectors show the risks ahead for the hundreds of direct and indirect jobs in Quebec’s copper industry.

As part of the continuing effort to shift Canadian trade away from the U.S. market, Foreign Affairs Minister Anita Anand was in Asia this week to continue working on a free-trade agreement with the Association of Southeast Asian Nations.

The economies of the 10-country bloc as a group would comprise Canada’s sixth-largest trading partner, but it already has access to four ASEAN members – Brunei, Malaysia, Singapore and Vietnam – under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

“The work is being done with alacrity to finalize the text of the free trade agreement,” Anand told Reuters as she met counterparts from the ASEAN bloc in Malaysia. “It is complex but we are very much looking forward to it being completed as soon as possible,” she said, without providing further details.