Canada’s August 1st Tariff Deadline: What & Why

Trade between Canada and the U.S. has gone through significant changes this year, with new tariffs leading to uncertainty amongst businesses and consumers. To understand why these new tariffs matter, it’s important to look at what led to this moment and how it affects trade between Canada and the U.S. going forward.

For young Canadians, these shifts could influence everything from the cost of everyday goods and job opportunities to the stability of industries we may work in one day.

What Was the August 1 Tariff Deadline All About?

President Trump set the August 1 deadline for a trade deal, wanting to pressure Canada into making concessions on issues such as drug trafficking and trade terms.

When that date arrived in 2025 with no deal in place, a new round of higher U.S. tariffs on Canadian goods took effect. Specifically, President Trump issued an executive order raising “reciprocal” tariffs from 25% to 35% on Canadian goods not covered under the Canada-US-Mexico Agreement (CUSMA).  Additionally, goods rerouted to avoid these tariffs now face 40% tariffs plus penalties.

How We Got Here: A 2025 Trade Timeline

2025 has been an interesting year for trade between the US and Canada. Here’s a short timeline to explain how we arrived at the August 1st trade deadline:

January 20 – President Trump launched his “America First Trade Policy,” ordering a sweeping review of U.S. trade deals including CUSMA, signaling potential protectionist moves toward Canada. This set the stage for the tariff escalations that followed in early 2025.

February 1 – President Trump signs an executive order imposing tariffs on Canadian exports to the U.S. at 25% on all products, except energy, critical minerals and potash, which were hit with a rate of 10%.

March 4 – Tariffs on goods from Canada took effect. In response, Canada implemented 25% tariffs on $30 billion worth of U.S. goods.

March 6 – Two days after President Trump’s original tariffs on Canada come into force, he alters his executive order, giving an exemption for products that fall under the terms of the Canada-U.S.- Mexico Agreement (CUSMA).

June 3 – Separately from the tariffs on Canadian goods, President Trump doubles his tariff on steel and aluminum imports from all countries, to 50%. Canada is the top supplier of both products to the U.S.

July 10 – President Trump threatens to boost the tariffs on Canadian goods to 35% if “Canada works with me to stop the flow of Fentanyl”.

August 1 – President Trump imposed 35% tariffs on Canadian goods that aren’t compliant with the Canada-U.S.-Mexico Agreement (CUSMA).

Why Should You Care About Tariffs?

Tariffs, regardless of their intent, often have a negative effect for consumers. Some potential effects of President Trump’s tariffs include companies often raising their prices to offset the cost of tariffs which they will pass down to the customers.

Another potential impact is job losses in industries that rely heavily on exports, including food, automobiles, aerospace, and petroleum production. For students like me who will be graduating in the next few years, the tariff dispute puts job opportunities at risk, affects the cost of living, and creates uncertainty for the industries of the future.

The encouraging news is that RBC estimates that only around 6% of Canadian goods shipped to the U.S. are not CUSMA-compliant. This means that most goods will continue to cross the border without added costs, reducing some of the concerns raised when the tariffs were first announced.

 What Happens Next?

In the next few weeks and months, talks between the 2 countries will continue to happen, with both countries not wanting to escalate with further tariffs.

For Canadians, the immediate effects may be small, but prices could rise in certain sectors over time. The bigger milestone is July 1, 2026, when the CUSMA joint review takes place. That meeting will determine whether the deal faces renegotiation or not. What happens then will shape trade in North America for the next decade and is a key date to watch for all young Canadians.

We as young Canadians aren’t going to end the tariff dispute on our own, but it’s super important that we stay informed about the issues that shape the Canada we’ll one day inherit.