Goods transshipped to another country to evade the new tariffs would be subject to a transshipment levy of 40%, according to a White House fact sheet.
The announcement blaming Canada’s “continued inaction and retaliation” comes after Trump said Canadian Prime Minister Mark Carney reached out ahead of an August 1 tariff deadline, but no conversations between the two took place.
Carney early on Friday said he was disappointed by Trump's decision.
U.S. duties and tariffs will heavily affect lumber, steel, aluminum, and automobiles, he added, vowing action to protect Canadian jobs, buy Canadian goods, invest in industrial competitiveness and diversify export markets.
Trump told NBC News on Thursday he was open to further discussions with Canada, adding that he may even speak with Carney later in the night.
“Canada shouldn’t settle for anything less than the right deal. Now is not the time to roll over. We need to stand our ground,“ he said in a post on X.
U.S. Commerce Secretary Howard Lutnick said Trump could reconsider the tariff if Carney “starts turning on the charm and if he takes off his retaliation.”
Mexico will still have to pay a 25% duty on U.S.-bound exports that are non USMCA-compliant, a tariff that Trump has linked to demands that Mexico do more to curb drug and human smuggling.
The economy has shown surprising resilience in the face of tariffs and is expected to avoid recession, economists say.
Canadian government data shows exports to the U.S. dropped by 10 percentage points to 68% of total exports between May 2024 and May 2025, focused on manufacturing products such as cars and parts, and products made with steel and aluminum.
Carney told reporters in June that if the two countries do not reach a trade deal by August 1, Canada would likely impose more counter levies on U.S. exports of steel and aluminum. - REUTERS
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