US markets opened lower on Friday as President Donald Trump intensified his tariff measures against Canada, increasing uncertainty surrounding trade policy. In the early hours of trading, the Dow Jones Industrial Average (.DJI) dropped 215.88 points, or 0.48%, to 44,434.99. The S&P 500 (.SPX) declined 24.52 points, or 0.39%, to 6,255.94, while the Nasdaq Composite (.IXIC) slipped 55.63 points, or 0.27%, to 20,575.04.
Trump on Thursday announced a steep 35% tariff on all Canadian imports, set to take effect from August 1. The new tariff marks a dramatic escalation in trade tensions between the two countries and follows Trump’s June 28 decision to formally end trade negotiations with Canada.
In a letter addressed to the Canadian government, Trump hinted at the possibility of revising the tariffs if Canada cooperates on stemming the flow of fentanyl into the US “If Canada works with me to stop the flow of fentanyl, we will, perhaps, consider an adjustment to this letter. These tariffs may be modified, upward or downward, depending on our relationship with your country,” the letter read.
Trump’s confrontational stance toward Canada began as early as November 2024, before he assumed office, when he proposed a 25% tariff on all Canadian imports, accusing the country of failing to secure its borders with the US. On February 1, shortly after taking office, Trump followed through with the 25% tariff announcement, only to delay it by a month. The tariffs were officially implemented on March 4, triggering a retaliatory response from Canada and sparking a full-blown trade war.
Canada has also felt the pressure of Trump’s broader protectionist policies, including tariffs on steel, aluminum, and automobiles. While the country managed to avoid his controversial “Liberation Day” tariff wave, the ongoing duties have strained cross-border economic ties.
In May, two federal courts dealt a blow to Trump’s tariff regime by striking down some of the more aggressive 25% levies on Canadian goods. Despite the legal setbacks, the administration has continued to pursue its hardline approach. Efforts to restart negotiations emerged during the G7 Summit in mid-June, when Canadian Prime Minister Mark Carney expressed optimism about reaching a trade deal within 30 days. However, Trump abruptly ended the talks on June 27, citing Canada’s proposal to impose a tax on American tech companies. The dialogue briefly resumed on June 29 after Canada withdrew the proposed tax, but Thursday’s tariff announcement indicates a renewed hardline posture from the Trump administration.