US President Donald Trump to impose 35% tariff on goods from Canada - Reuters

Lallalit Srijandorn FXStreet

US President Donald Trump on Thursday announced a 35% tariff rate for goods imported from Canada, beginning August 1, per Reuters.

Trump further stated that the European Union (EU) would receive a letter notifying them of new tariff rates "today or tomorrow."

He also announced more tariffs and said he planned to impose blanket levies of 15% or 20% on most trade partners.

Market reaction

The Canadian Dollar (CAD) attracts some sellers following this headline. At the time of writing, the USD/CAD is trading 0.42% higher on the day to trade at 1.3712.

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD edges lower due to safe-haven demand

GBP/USD inches lower after opening at a bullish gap, trading around 1.3200 during the Asian hours on Monday. The pair loses ground as the Pound Sterling declines against the US Dollar amid emerging safe-haven demand, which could be attributed to the United States-Iran talks uncertainty.

EUR/USD remains stronger despite uncertainty surrounding US-Iran talks

EUR/USD pair maintains its upward momentum for a third consecutive session, trading near 1.1390 during Monday's Asian hours. Despite this positive streak, the Euro’s gains could face headwinds if geopolitical uncertainty sparks a flight to safety, boosting the US Dollar.

Gold falls to near $4,050 amid US- Iran talks uncertainty

Gold price attracts some sellers to around $4,050 during the Asian trading hours on Monday. The precious metal declines amid uncertainty surrounding US-Iran talks and hawkish Federal Reserve expectations. The US Nonfarm Payrolls data will take center stage later on Thursday.

Week ahead: NFP report to challenge Dollar strength and the hawkish Fed

The end of the Middle East conflict and the steps made so far towards securing a comprehensive deal over the next five weeks – with oil prices dropping aggressively but maintaining a small risk premium – has allowed investors to focus elsewhere. Contrary to expectations, the greenback has been the main protagonist lately.

Middle East War updates: US, Iran appear to be returning to talks to end the war

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.