US President Donald Trump signed an executive order on Thursday that raised tariffs on Canadian imports to the United States from 25% to 35%.According to a White House factsheet, the new import rates take effect on August 7. The tariff applies to all items not covered by the US-Mexico-Canada trade agreement. A 40% transshipment levy would apply to goods rerouted through another country to avoid these tariffs.This action follows the Trump administration’s months of tariff warnings and growing trade disputes that have provoked Canadian resentment.The announcement came shortly before an August 1 deadline Trump had set for numerous countries to establish trade agreements with his administration.The White House stated on Thursday evening that Trump increased Canadian tariffs due to the country’s inaction regarding “the public health crisis caused by fentanyl and illicit drugs flowing across the northern border into the United States”.Even at the presser, President Trump claimed that Canada charge higher tariff on farmers and the hike in tariff is a fair rate.”Well, they have to pay a fair rate. It’s all it’s very simple.They have been charging very very high tariffs to our farmers, some over 200% and they have been treating our farmers very badly for years and… they have been poorly led and all we want is fairness for our country. That’s all. You know, they want to be under the, as we call it, the golden dome. And I said, well, you know, you’re going to have to pay for that. They want it they want a lot of things from our country. And for years we did it. We basically protect them with our military. They spend very little money on their military, as you know, not an acceptable amount of money,” Trump said at briefing.Early Thursday, Trump posted on social media suggesting he might withhold a tariff agreement with Canada as retaliation for their recognition of Palestine’s statehood.”Wow! Canada has just announced that it is backing statehood for Palestine,” Trump wrote on his Truth Social platform. “That will make it very hard for us to make a trade deal with them. Oh’ Canada!!!”Ottawa officials have consistently stated that minimal fentanyl entering the US comes from Canada, though they have strengthened border measures.US Commerce Secretary Howard Lutnick indicated Trump might reconsider the tariff if Canadian Prime Minister Mark Carney “starts turning on the charm and if he takes off his retaliation”.On Wednesday, Carney noted that whilst trade discussions were productive, they might not conclude by the deadline. He maintained that eliminating all US tariffs was improbable.Carney must align his response with the ten provinces, where opinions vary between strict and lenient approaches.William Huggins, McMaster University’s assistant professor in economics, told the Guardian that Canada’s economy was vulnerable due to its close integration with its larger neighbour.”Canada has tried to negotiate sort of forcefully from a position of not acquiescing to every demand, but by the same token, has also realised it’s not in the strongest position to do so … We’ve had to navigate carefully,” said Huggins.Approximately 75% of Canadian exports go to the US.Since March, Trump implemented various Canadian tariffs: 25% on all goods excluding potash and energy products, 10% on energy resources including potash, 50% on steel and aluminium imports, and 25% on automotive products.In June, Carney informed reporters that Canada would likely implement additional counter-levies on US steel and aluminium exports if no trade agreement was reached by August 1.