Escalating trade tensions as US imposes new tariffs on Canada. Trump's tariff threats widen, putting global economic stability at risk. The future of the North American trade agreement hangs in the balance. #USMCAinCrisis #TradeWarAlert#USTariffsCanada
00:00Good evening. We begin tonight with breaking news on the escalating trade tensions between the United States and its northern neighbor, Canada.
00:08President Donald Trump has dramatically intensified these disputes, threatening a new 35% tariff on Canadian goods.
00:15Effective August 1, this move, a significant increase from the current 25% rate already applied to some Canadian products, has sent shockwaves across North America.
00:25The announcement came via a letter published on Trump's social media platform, Truth Social.
00:32This specific threat against Canada follows a week of similar letters dispatched to various world leaders, outlining impending tariff rates if new trade deals aren't reached.
00:41What makes Canada's situation particularly notable is that it stands as by far the largest trading partner with the United States to receive such a direct and substantial tariff threat this week.
00:52This escalation arrives, despite ongoing trade negotiations between the two nations, which had a self-imposed deadline of July 21 to reach a new agreement.
01:03A critical question now hangs over the future of the United States-Mexico-Canada agreement.
01:07Widely known as USMCA, an administration official indicated that, while the 25% tariff on specific Canadian imports was expected to rise to 35%, goods explicitly exempted by the USMCA were anticipated to remain untouched.
01:23Such an exclusion, if it holds, would significantly blunt the impact of this tariff increase on Canada.
01:28However, sources close to the discussions clarify that no final paper has been drafted, and President Trump has not made a definitive decision, leaving open the possibility for changes.
01:40It remains unclear whether this latest tariff threat would indeed apply to goods already covered by the USMCA historically.
01:49President Trump has exempted USMCA-compliant goods from previous tariffs, a measure that notably softened the blow for both Canada and Mexico.
01:57The unpredictability of these decisions creates immense uncertainty for businesses and investors alike.
02:04President Trump has cited several key reasons for imposing these new tariffs in his letter.
02:09First, the flow of fentanyl.
02:11Trump explicitly mentioned the influx of fentanyl from Canada as an initial justification for targeting.
02:17America's northern neighbor, yet US federal statistics paint a different picture,
02:21indicating that Canada is responsible for a minuscule percentage around 0.2% of illegal fentanyl seized at the US border.
02:30The vast majority, in fact, is confiscated at the US border with Mexico.
02:34Trump, however, suggested that if Canada cooperates to stop the fentanyl flow, he will perhaps consider an adjustment to this letter.
02:41Second, long-standing dairy and lumber disputes.
02:45Trump accused Canada of ripping us off for years on lumber and on dairy products.
02:50He specifically highlighted Canada's roughly 250% tariff on US dairy exports to the country, framing it as an unfair trade practice.
02:58Third, the trade deficit.
03:00The president also claimed that the trade deficit with Canada poses a threat to the US economy and national security.
03:08A frequent refrain in his trade rhetoric.
03:11And finally, a more recent point of contention, the digital services tax Canada had recently proposed a retroactive digital services tax that would heavily impact American tech companies.
03:21While Canada indefinitely postponed the tax in an effort to continue trade talks and avert higher tariffs, it was a significant point of contention for Trump, who had publicly labeled it a blatant attack.
03:34In response to these grave threats, Canadian Prime Minister Mark Carney has affirmed that his government has steadfastly defended our workers and businesses throughout the trade negotiations with the United States and will continue to do so.
03:47Addressing the fentanyl concerns directly, Carney stated that Canada has made vital progress to stop the scourge of fentanyl in North America, and remains committed to continuing to work with the United States on this critical issue.
04:00Earlier this year, Canada had already appointed a fentanyl czar and launched a new border plan specifically aimed at intercepting narcotics.
04:08Meanwhile, Pierre Poilover, Canada's conservative opposition leader, condemned the tariffs outright, calling them another unjustified attack on Canada's economy.
04:17The economic fallout for Canada from the imposition of these US tariffs is expected to be especially damaging, primarily because Canada sells approximately three-quarters of its goods to the United States.
04:29Canada is a significant auto manufacturing hub and a major global supplier of metals.
04:34sectors that are particularly vulnerable to these tariffs, previous tariffs had already included 50%, taxes on imported steel and aluminum, and 25% on most cars and car parts.
04:47This unpredictable policy, frequently described as whipsaw, has left investors, trading partners, businesses, and everyday Americans scrambling to make plans.
04:58The economic ground shifts not just from week to week, but in some cases from hour to hour.
05:03For Canadian businesses, desperately seeking stability, this constant indecision is quite simply, killer.
05:10Canada has a history of retaliating against US tariffs.
05:14For example, it previously imposed a 25% tariff on US-made vehicles not compliant with USMCA and rolled out tariffs on billions of dollars worth of US goods, including whiskey, sporting gear, and household appliances, in response to earlier steel and aluminum tariffs.
05:31However, President Trump has explicitly threatened to increase levies on Canada, if it retaliated again, creating a dangerous cycle of potential escalation.
05:39This latest round of tariffs is set to take effect on August 1, even as trade negotiations continue.
05:47This move is part of a broader expansion of President Trump's trade war, as he has broadened his trade war in recent days.
05:54Threatening new tariffs on other countries, including allies like Japan and South Korea, and even a 50% tariff on copper.
06:00This latest salvo has rattled investors anew, causing stock futures to dip, reflecting widespread market anxiety.
06:08Adding another layer of uncertainty.
06:11The new tariff rates set by Trump this week could all be reduced to zero if the administration loses.
06:16Its appeal later this month before the US Court of Appeals for the Federal Circuit on July 31.
06:21This appeal stems from a significant May ruling by the US Court of International Trade, which found that Trump had acted beyond his legal authority.
06:30By using emergency powers to impose tariffs in the absence of an actual emergency, the constant shifts, threats, and legal challenges underscore the precarious nature of the economic relationship between Canada and the United States, keeping the future of their extensive trade agreement in profound question.
06:48We will continue to monitor this developing story.
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