Goods transshipped to evade the 35% tariff will be subject, instead, to a transshipment tariff of 40%.
US President Donald Trump signed an executive order on 31 August 2025, raising tariffs on Canadian goods from 25% to 35% for products not covered by the US-Mexico-Canada trade agreement, effective 1 August 2025.
“In response to Canada’s continued inaction and retaliation, President Trump has found it necessary to increase the tariff on Canada from 25% to 35% to effectively address the existing emergency,” the White House said.
The White House announced that goods transshipped to evade the 35% tariff will be subject, instead, to a transshipment tariff of 40%. This move partly targets Canada, accusing it of failing to stop fentanyl smuggling and retaliating amid an ongoing tariff dispute initiated by Trump.
Despite claims that Canadian Prime Minister Mark Carney reached out before the 1 August tariff deadline, no talks occurred. Trump warned that countries not making a deal by the deadline would face higher tariffs.
The planned 35% tariff increase will target steel, aluminium, automobiles, and products outside the USMCA agreement.
Carney stated that trade talks have been constructive but may not meet the deadline, and a deal removing all US tariffs is unlikely. He also warned that if no agreement is reached by August 1, Canada may impose additional counter tariffs on US steel and aluminium exports.
