PRESIDENT Donald Trump said in a letter that he will raise taxes on many imported goods from Canada to 35 per cent, deepening a rift between the two North American countries that have suffered a debilitating blow to their alliance. The Thursday letter to Canadian Prime Minister Mark Carney is an aggressive increase to the top 25 per cent tariff rates that Trump first imposed in March after months of threats.

 

Trump’s tariffs were allegedly in an effort to get Canada to crack down on fentanyl smuggling despite the relatively modest trafficking in the drug from that country. Trump has also expressed frustration with a trade deficit with Canada that largely reflects oil purchases by America.

 

“I must mention that the flow of Fentanyl is hardly the only challenge we have with Canada, which has many tariffs, and Non-Tariff Policies and Trade Barriers,” Trump wrote in the letter. The higher rates would go into effect from August 1, creating a tense series of weeks ahead for the global economy as recent gains in the S&P 500 stock index suggest many investors think Trump will ultimately back down on the increases. But stock market futures were down early Friday in a sign that Trump’s wave of tariff letters may be starting to generate concern among investors.

 

In a social media post, Carney said, Canada would continue to work towards a new trade framework with the US and has made “vital progress to stop the scourge of fentanyl.” “Through the current trade negotiations with the United States, the Canadian Government has steadfastly defended our workers and business,” Carney said. While multiple countries have received tariff letters this week, Canada — America’s second-largest trading partner after Mexico — has become something of a foil to Trump. It has imposed retaliatory tariffs on US goods and pushed back on the President’s taunts of making Canada the 51st state. Mexico has also faced 25 per cent tariffs because of fentanyl, yet it has not faced the same public pressure from the Republican US President.