Trump orders 35% tariff for goods from Canada, citing lack of cooperation on illicit drugs

US President Donald Trump has raised the tariff rate on US imports from Canada to 35 per cent from 25 per cent, effective from Friday, 1 August.

The announcement from the White House late on Thursday said Canada had failed to “do more to arrest, seize, detain or otherwise intercept... traffickers, criminals at large, and illicit drugs”.

Trump has heckled Canada for months and suggested it should become its 51st US state. He had threatened to impose the higher tariff on Canada if no deal was reached by Friday, his deadline for reaching trade agreements with dozens of countries.

Earlier Thursday, the president said Canada's announcement it will recognise a Palestinian state would "make it very hard” for the United States to reach a trade agreement with its northern neighbour. Trump has also expressed frustration with a trade deficit with Canada that largely reflects oil purchases by America.

Prime Minister Mark Carney had tempered expectations over tariffs, saying Ottawa would only agree to a deal “if there's one on the table that is in the best interests of Canadians”.

In a statement released early on Friday, he said he was disappointed by Trump's actions and vowed to diversify Canada's exports.

“Canada accounts for only 1 per cent of US fentanyl imports and has been working intensively to further reduce these volumes,” he said, pointing to heavy investments in border security.

Carney added that some industries — including lumber, steel, aluminum and automobiles — will be harder hit, but said his government will try to minimize the impact and protect Canadian jobs.

Canada was not included in Trump's updated list of tariff rates on other countries announced late Thursday. Those import duties are due to take effect on 7 August.

Trump sent a letter to Canada a few weeks ago warning he planned to raise duties on many goods imported from Canada to 35 per cent, deepening the rift between the two North American countries that has undermined their decades-old alliance.

Some imports from Canada are still protected by the 2020 United States-Mexico-Canada Agreement or USMCA, which is up for renegotiation next year.

The White House's statement said goods transshipped through Canada that are not covered by the USMCA would be subject to a 40 per cent tariff rate. It did not say where the goods might originate.

President Donald Trump said on Thursday that there would be a 90-day negotiating period with Mexico after a call with that country's leader, Claudia Sheinbaum, keeping 25 per cent tariff rates in place.