Shares Drop Following Increased Canadian Tariffs

On Friday, shares took a hit after President Trump announced a 35% tariff on Canadian goods not included in the USMCA trade agreement.

The Dow Jones industrial average fell by 279 points, roughly 0.63%. This drop came after the S&P 500 and NASDAQ composite had seen record highs just the day before.

The decline was somewhat muted compared to the market’s reaction when the “mutual” tariffs were first announced back on April 2.

Most trade activities with Canada, the second-largest trading partner for the U.S. after Mexico, revolve around terms that Trump negotiated during his first term. However, the new 35% tax will apply to remaining items, Trump noted on social media.

He remarked, “Instead of cooperating with the U.S., Canada retaliated by introducing its own tariffs.” He added that beginning on August 1, 2025, Canada will impose a 35% tariff on specific Canadian products shipped to the U.S., independent of existing duty categories.

Trump mentioned in a phone interview with NBC that the EU would soon receive a letter outlining a potential 50% tariff starting August 1, as he had threatened earlier.

In the last week, Trump has sent updates to several countries regarding tariff adjustments, with most rates remaining similar to those announced in April. For instance, the tariffs on Japan and South Korea will be around 25%.

One notable exception involves Brazil, where Trump’s disapproval of the treatment of former president Jia Bolsonaro has led to tariffs ranging from 10% to 50%.

Trump had previously altered planned tariffs on the EU from 20% to 50% in response to its digital services tax affecting U.S. companies like Google and Facebook.

Regarding the stock market, Trump remarked, “I think the tariffs were very well received. Today, the stock market has reached a new high.”

He noted, “Not everyone needs to receive the letter. We’re just setting tariffs,” perhaps indicating a selective approach.

Trump stated, “I want to do it today. We’re talking about the European Union, which comprises many countries and Canada. We’ll be releasing details in the next few hours.”

The president’s aim with these tariffs is to push for new trade deals that will lower barriers for American exports. Initially, he set a July 9 deadline for other countries and highlighted the historical benefits of tariffs for U.S. industry and government revenue.

His administration has also brokered arrangements with the UK, China, and Vietnam, and has provided a “roadmap” for negotiations with India.