Canadian Dollar Falls Amid Tariff Shock
Countries Without Tariff Letters Also "Will Pay 15% or 20% Tariffs"
Negative Impact of Tariffs Dismissed: "Stock Market Hits Record High"
A tariff letter sent by Donald Trump, President of the United States, addressed to Mark Carney, Prime Minister of Canada, was posted on Truth Social on the 10th (local time). The letter stated that a 35% reciprocal tariff rate would be applied starting August 1. President Trump Truth Social
On July 10 (local time), President Donald Trump of the United States officially notified Canada that a 35% tariff would be imposed on Canadian products starting August 1. He also warned that all other countries that have not yet received a tariff letter and have not signed a trade agreement with the United States would also face tariffs.
President Trump disclosed the letter addressed to Mark Carney, Prime Minister of Canada, on the social networking service Truth Social that day. In the case of Canada, along with Mexico, a 25% tariff has been applied to imported goods?excluding certain items such as energy and automobile parts?since May, but this announcement means the rate will be raised to 35%.
This is separate from item-specific tariffs, and will also apply equally to transshipment goods exported to the United States via Canada from third countries. The transshipment regulation is interpreted as a measure targeting China, which is seen as circumventing U.S. sanctions on China through so-called "origin laundering."
In the letter, President Trump cited Canada's failure to prevent the inflow of fentanyl into the United States as the main reason for the 35% tariff. He stated, "Due to Canada's failure, drugs are flowing into the United States," and added, "The United States had no choice but to take tariff measures to address this issue."
He also expressed dissatisfaction with Canada's trade barriers and agricultural tariffs. He pointed out, "Canada imposes tariffs of up to 400% on U.S. dairy products, making it difficult for American dairy farmers to even access the Canadian market." He further emphasized, "The trade deficit poses a serious threat not only to the U.S. economy but also to national security."
President Trump warned that if Canada raises tariffs on U.S. products, the United States will impose additional retaliatory tariffs on top of the 35% rate, corresponding to the increase. He added, "If Canada cooperates with the United States in resolving the fentanyl issue, the contents of the letter could be reconsidered," and stated, "Tariffs can change depending on the relationship between the two countries."
The value of the Canadian dollar fell due to concerns over the impact of the tariffs. As of 9:07 p.m. on July 10, the exchange rate of the Canadian dollar against the U.S. dollar surged from the previous 1.3654 Canadian dollars to 1.3731 Canadian dollars immediately after the announcement, before gradually stabilizing.
Meanwhile, in a phone interview with NBC in the United States on the same day, President Trump stated, "All remaining countries will have to pay tariffs, whether it is 15% or 20%." Currently, the basic tariff rate is set at 10%. In this context, "remaining countries" is interpreted to mean those that have not yet received a letter.
President Trump also dismissed concerns that the imposition of additional tariffs could negatively affect the stock market or trigger inflation. He said, "I believe the tariff measures have been very well received," and added, "The stock market hit a record high today."
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