Trump Announces Additional 10% Tariff on Canadian Goods
President Donald Trump announced Saturday a 10% increase in tariffs on Canadian goods, marking a sharp escalation in the trade dispute between the two nations. The declaration came via Truth Social, where Trump accused Canada of misrepresenting former President Ronald Reagan's position on tariffs through what he called a "fraudulent" advertisement.
The tariff increase is applied "over and above what they are currently paying," according to Trump's statement. This move intensifies pressure on Canada's economy, which has already been strained by existing sectoral tariffs on automobiles, steel, aluminum, lumber, and energy—critical exports from Canada to the United States.
Ontario Advertisement Triggers Presidential Response
The controversy centers on a television advertisement funded by Ontario's provincial government that aired during the World Series on Friday night. The ad featured excerpts from Reagan's April 1987 radio address, in which the former president stated that tariffs "hurt every American worker and consumer" and warned against "fierce trade wars."
Ontario Premier Doug Ford had committed to pulling the advertisement after the weekend, following discussions with Canadian Prime Minister Mark Carney. However, the spot continued running during Game 1 of the World Series between the Toronto Blue Jays and Los Angeles Dodgers, which Trump viewed as a deliberate provocation.
"Their ad was to be taken down IMMEDIATELY but they let it run Friday night during the World Series," Trump wrote, calling it a "hostile act". The president told reporters leaving the White House, "They could have pulled it tonight. Well, that's dirty play—but I can play dirtier than they can, you know".
Trade Talks Remain Suspended Despite Ford's Concession
Trump had already terminated trade negotiations with Canada on Thursday after the advertisement first aired on U.S. television networks. The president remains firm in his position despite Ontario's decision to pause the $54 million advertising campaign starting Monday.
Prime Minister Carney stated his government remains ready to resume discussions aimed at reducing tariffs in certain sectors. However, Trump told reporters aboard Air Force One en route to the ASEAN summit in Malaysia that he had no intention of meeting with Carney there, noting he was inclined to leave the current trade arrangement "the way it is".
The breakdown represents a significant rupture in relations between the United States and its second-largest trading partner. More than three-quarters of Canadian exports go to the U.S., with approximately $2.7 billion worth of goods and services crossing the border daily.
What the Reagan Advertisement Said and Why It Angered Trump
Former President's Words Used to Criticize Tariff Policy
The Ontario advertisement drew directly from Reagan's April 25, 1987, radio address titled "Radio Address to the Nation on Free and Fair Trade." In that speech, Reagan explained his decision to impose 100% tariffs on certain Japanese electronics following violations of a semiconductor trade agreement.
Reagan stated in his original address: "Imposing such tariffs or trade barriers and restrictions of any kind are steps that I am loath to take". He continued, explaining that "over the long run such trade barriers hurt every American worker and consumer".
The advertisement omitted crucial context from Reagan's speech, however. Reagan's criticism of tariffs came while announcing new duties on Japan, and he emphasized his commitment to both "free trade" and "fair trade". His administration officials consistently noted that tariffs were not their preferred policy tool but felt compelled to act against unfair trading practices.
White House Claims Advertisement Was "Fraudulent"
The Ronald Reagan Presidential Foundation & Institute publicly objected to the advertisement, stating it "misrepresents" Reagan's 1987 address. The foundation, which maintains the Reagan Presidential Library in Simi Valley, California, said Ontario did not receive permission to "use and edit the remarks" and announced it was reviewing legal options.
Trump amplified the foundation's criticism, writing that "The Ronald Reagan Foundation has just announced that Canada has fraudulently used an advertisement, which is FAKE". He added that "TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A."
White House spokesman Kush Desai characterized the ad as the "latest example of how Canadian officials would rather play games than engage with the Administration". Kevin Hassett, director of the National Economic Council, told reporters that Canada has shown a "lack of flexibility" and cited "leftover behaviors from the Trudeau folks," referring to the previous administration's frosty relationship with Trump.
Economic Impact: What the Tariff Increase Means for US-Canada Trade
Which Canadian Industries Face the Biggest Hit
Canada's economy has absorbed significant damage from Trump's existing tariffs, with the unemployment rate climbing to 7.1% in August—the highest level in nine years outside the pandemic period. Manufacturing jobs have declined by 55,000 since January, with several Ontario auto parts and assembly plants announcing layoffs and production cuts.
The automotive sector, heavily concentrated in Ontario, has been particularly vulnerable. Stellantis announced this month it would relocate a production line from Ontario to Illinois, reflecting the industry's response to Trump's tariff regime. Approximately two million Canadian jobs depend on goods exports to the United States, making the economy exceptionally exposed to trade disruptions.
In 2024, the United States imported approximately $422 billion in goods from Canada while exporting $348.5 billion, resulting in a trade deficit of roughly $73.6 billion in goods alone. When services are included, the deficit narrows to between $36 billion and $45 billion, representing a mere 0.2% of U.S. GDP.
Potential Consumer Price Increases in the United States
The additional 10% tariff will likely translate into higher costs for American businesses and consumers. Canadian exports to the United States consist largely of inputs used by American companies in their own production processes—more so than with other trading partners.
Energy products, including oil and gas, constitute a substantial portion of Canada's exports to the United States. Any tariff increases on these commodities would flow through supply chains, potentially driving inflationary pressures at the retail level.
The integrated nature of U.S.-Canada trade means that disruptions affect both sides of the border. American manufacturers relying on Canadian automotive parts, steel, aluminum, and lumber face higher input costs that typically get passed on to consumers or absorbed through reduced profit margins.
Canada's Response: Carney Ready to Resume Talks as Ford Pulls Ad
Provincial vs. Federal Strategy Creates Tensions
The advertisement controversy exposed tensions between Ontario's provincial government and the federal administration in Ottawa. Ford, a populist conservative who does not belong to Prime Minister Carney's Liberal Party, initially defended the ad after Trump terminated trade talks Thursday.
Ford posted Friday that Canada and the United States are allies "and Reagan knew that both are stronger together," providing a link to Reagan's full speech. By Friday evening, however, he announced the advertising campaign would pause Monday so trade talks could resume, stating Ontario had "achieved our goal, having reached U.S. audiences at the highest levels".
The $54 million campaign had purchased ad reservations across 198 of the nation's 210 media markets, with more than 530 airings in the New York market and approximately 280 in Washington, D.C. The advertisement's strategic placement during the World Series ensured maximum visibility but ultimately backfired by provoking Trump's additional tariff threat.
What's Next for North American Trade Relations
The dispute over the Reagan advertisement comes as the United States, Canada, and Mexico prepare for a scheduled review of the U.S.-Mexico-Canada Agreement (USMCA), the trade deal Trump negotiated during his first term. Trump has since expressed dissatisfaction with the agreement, leading to speculation about potential renegotiation or withdrawal.
Carney met with Trump earlier this month attempting to ease trade tensions, but the Reagan ad controversy derailed those efforts. The president's decision to negotiate separately with Mexico, rather than maintaining trilateral talks, signals a fundamental shift in his approach to North American trade architecture.
Hassett's comments about negotiating with other countries "around the world" and dealing separately with Mexico suggest the administration views Canada as an outlier in trade discussions. Canada's challenge lies in its overwhelming dependence on the U.S. market, with limited ability to quickly diversify export destinations despite Carney's stated goal of doubling exports to countries outside the United States.
The additional 10% tariff threatens to further weaken Canada's labor market and economic growth. Business surveys show export-oriented companies quickly cut hiring plans in response to U.S. tariffs, with other sectors following suit after a lag. Without a new trade agreement that rolls back tariffs, economists warn that employment weakness will continue broadening across the Canadian economy.
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