From AFOA General Counsel, Olsson Frank Weeda:
Increase in Tariff Rate on Canada
On July 10, 2025, President Trump announced on social media that starting August 1, 2025, the U.S. will impose 35% tariffs on Canadian products in response to the continued illicit flow of fentanyl across the northern border, Canadian tariffs on US dairy farmers, and other non-tariff policies and trade barriers. While the letter mirrors the same terms as the previously issued letters regarding country-specific reciprocal tariff rates issued this week to other countries (see the previous update below), products of Canada are currently exempt from reciprocal tariffs; instead, Canadian-origin products are currently subject to 25% IEEPA-based tariffs issued in response to the alleged flow of fentanyl across Canada’s border (10% for energy and potash, with exemptions for USMCA-qualifying goods). The letter is not clear as to whether the 35% tariff will be an increase in the current 25% IEEPA/fentanyl tariff rate imposed on Canadian-origin goods or if instead the current 25% IEEPA/fentanyl tariff would be replaced by a new 35% country-specific reciprocal tariff.
No additional clarifications have officially been made by the Administration or by U.S. Customs and Border Protection. We will continue to monitor and will provide updates on outstanding questions from the trade community, including whether USMCA eligible products will continue to be exempt and whether there will be a separate exemption for goods made with U.S. content.
Canada had initially planned to increase its retaliatory tariffs on imports of U.S. steel and aluminum from 25% to 50%, effective July 21. However, after having received the tariff letter, Canada has suspended its retaliation plan and is now in trade negotiations with the US.
As of the end of this afternoon, there are a total of 23 countries that have received tariff letters this week. The tariff letter for the EU has yet to be issued.
Sectoral Tariffs
President Trump also announced via social media that a 50% Section 232 tariff will be imposed on imports of copper, effective August 1, 2025. No corresponding Executive Order, Proclamation, or documentation has been released to date. The announcement suggested that the trade action is being taken to protect U.S. industries involved in semiconductors, aircraft, ships, ammunition, data centers, lithium-ion batteries, radar systems, missile defense systems, and hypersonic weapons. While President Trump’s announcement was silent as to whether copper derivatives will be part of this tariff action, we believe that they likely will be included, given that the Section 232 investigation conducted by Commerce included both copper and copper derivatives.
Potential Increase in 10% Baseline Tariffs
Currently, goods imported from virtually all countries are subject to a 10% baseline tariff. In an interviewyesterday, President Trump stated that not all countries would receive a letter setting out a specific tariff rate, and that all remaining countries would likely be subject to increased baseline tariffs of 15% or 20% instead. No document increasing baseline tariffs has been issued to date.
We will continue to circulate an end-of-day summary of significant trade developments throughout the week and share further updates as letters are issued.