Trump threatens Canada, Brazil with steep tariffs, escalating global trade tensions

U.S. President Donald Trump has threatened to impose a 35 percent tariff on Canadian exports starting August 1, intensifying his aggressive trade stance amid ongoing negotiations with America’s North American partners.

In a letter sent Thursday to Canadian Prime Minister Mark Carney, Trump warned that the punitive measure would be enforced unless significant concessions are made before the new deadline.

The warning to Canada is one of over 20 such letters dispatched this week as Trump intensifies his global trade war, targeting dozens of economies with looming tariff hikes. Canada and Mexico had hoped to reach a new agreement with the U.S. by July 21 to stabilise the United States-Mexico-Canada Agreement (USMCA), but Trump’s fresh ultimatum appears to have shifted the timeline to August 1.

“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1,” Prime Minister Carney posted on social media platform X on Thursday night.

The USMCA replaced the earlier North American Free Trade Agreement (NAFTA) in July 2020 following Trump’s demands for a renegotiation during his first term. A review of the trade pact is scheduled for next year, but Trump’s renewed hostilities have placed the future of the agreement in doubt.

Canada and Mexico have already been hit with previous tariffs, including 25 percent levies on a wide range of goods, though Canadian energy exports received a slightly lower rate. Trump has justified his trade actions by citing concerns over illegal immigration and drug trafficking, issues he has frequently tied to trade policy.

Despite signs of improving relations — including Carney’s visit to the White House on May 6 and a follow-up meeting at the G7 summit – Trump’s Thursday letter shows little sign of softening. The two leaders had reportedly found common ground in recent months, with Trump even jokingly suggesting that Canada should become the 51st U.S. state.

However, Trump also hinted at broader tariff actions in an NBC interview, revealing plans for blanket tariffs ranging from 15 to 20 percent on additional countries starting August 1. Among the new targets is Brazil, where Trump has proposed a steep 50 percent tariff unless a new trade agreement is reached in time.

Brazilian President Luiz Inácio Lula da Silva responded by expressing readiness to negotiate, even as his government considers reciprocal measures. Trump’s letter to Lula was laced with political undertones, accusing Brazil of mistreating his ally, former president Jair Bolsonaro.

“The United States is prepared to respond decisively,” Trump told NBC, noting that the European Union, America’s largest trading partner, would be receiving a similar warning “today or tomorrow.”

The expanding list of threatened tariffs has raised alarm among global economists and trading partners, many of whom fear that Trump’s escalating strategy could upend existing agreements, spark retaliatory actions, and rattle already fragile economies.

For now, Canada, Brazil, and other U.S. trading partners have until August 1 to either strike new deals or brace for potentially devastating tariff shocks.