Analysis August 12, 2025

The Trade Brief: Tariffs, Talks & Tensions

Daniela Lombardo – Trade Policy Analyst, Business Council of Canada Sarah Alrifai – Communications Specialist, Business Council of Canada

Canada’s Place in the World Global Affairs International Trade North America

Welcome back to Trade Brief!

We heard you enjoyed the last one and we’re not here to disappoint, so let’s dive in.

July moved fast, and so did the world of trade. New tariffs, tough talks, and more than a few curveballs.

July in a nutshell:

Higher U.S. tariffs are here for the long haul
USMCA is crucial to Canada’s exports
Sectoral tariffs will be the hardest to address

Double-digit tariffs are the new norm

The Trump administration rolled out a wave of new trade agreements, stacked with promises of billion-dollar investments and topped with double-digit tariffs…..(You can’t have it all apparently).

📃Who’s on the list?

🇪🇺EU – 15% tariffs, $600B in U.S. investments, $750B in U.S. energy purchases
🇮🇩Indonesia – 19% tariffs, commitments to remove trade barriers
🇯🇵Japan – 15% tariffs, $550B in U.S. investments, more U.S. access to Japan’s agricultural market
🇵🇭Philippines – 19% tariffs
🇲🇾Malaysia – 19% tariffs, $140B in purchases
🇰🇷South Korea – 15% tariffs, $350B in U.S. investments, $100B in U.S. energy buys
🇻🇳Vietnam – 20% tariffs, 40% for third country goods transshipped through Vietnam

📍Key takeaway: Tariffs are sticking around longer than expected. Some exemptions are possible (like gold), but penalties for transshipments (a.k.a import catfishing, a.k.a selling goods into the U.S through a third country to sidestep tariffs) are steep.

Here’s the meat🥩 and potatoes🥔 of it:

Some U.S. trade partners are questioning the Trump administration’s big-ticket investment terms and whether they’ll even work. Transshipment rules? Still a lil’ fuzzy.

The deal divide:

No deals: India, Canada.
Deadline extensions: China, Mexico.
As of Aug.7, there are 90 countries who now face equal or higher tariffs than April’s hikes. Yikes.

**Elsewhere, the tariff drama is spicier than this season’s Love Island:**

🇧🇷Brazil: 50% tariffs (the White House accuses them of threatening free speech & fair elections through court rulings against American companies and former Prez Jair Bolsonaro).
🇨🇭Switzerland: 39% tariffs for ignoring U.S. concerns. oh.
🇲🇽Mexico: 90-day pause at 25% while talks continue. Security talks are the VIP pass.
🇨🇳China: 90-day tariff truce. There’s hope for a trade deal this fall.
🇮🇳India: Extra 25% tariffs on top of the already existing 25% after refusing to ditch Russian oil.
🇨🇦Canada: 35% on goods outside USMCA. Canada has been accused of not cooperating on curbing fentanyl crossing the border.

Why USMCA matters 🤝

Here’s some good news:
- 92% of Canadian exports were tariff-free in June under USMCA.
- Legal challenges to emergency tariffs could help, but the White House is eyeing 👀other options.
The bad news:
- Canada still faces 50% tariffs on steel and aluminum, 25% on autos
- Q2 exports fell 25% compared to last year. Companies are absorbing costs (for now⏳) but prices are and could continue to creep up.

🪵Canadian lumber can now face up to 35% in tariffs. The U.S. doubled their countervailing duties.

Countervailing duties? What are these you may ask? Tariffs a country can impose when it claims the other country is not playing fair and giving an unfair advantage to their businesses – kind of like catching your opponent stacking the deck. You can’t change their hand but you can change the rules of the game. 🤷‍♀️

Business feels the heat🔥

Canada’s counter-tariffs are hitting companies at home harder than they hit the U.S.

Confidence down👎: Surveys show businesses –both Canadian and American— are losing by either delaying or canceling investments.

Businesses in the U.S. also expressed concern with the new tariffs as they face mounting costs.

📱Apple: $800M in tariff costs in Q1, heading to $1B by September.
🚗Auto industry: $12B spent; Toyota expects 44% drop in net profits.
🚧Caterpillar: Warns $1.5B tariff hit in 2025.

U.S. economy: Still humming along, but job growth slowed in May and June. Trump team disputes the numbers. Experts worry about the long game.

✨Sectoral tariffs✨: the tough nut to crack

The U.S. has security tariffs used to protect the economy, these are called Section 232 tariffs. Sadly, 232 tariffs are NOT covered by USMCA. And guess what? More are on the way. President Trump’s eyeing new hits on pharmaceuticals and chips (the tech kind, not the potato kind-phew 😮‍💨).

Copper chaos:

New tariffs already imposed on semi-finished copper products.
Canada mostly exports refined copper. So far, so good.
But a copper tariff study is due mid-2026, so maybe more tariffs there. Stay tuned.

📍Why it matters: The U.S. knows it relies on key imports, which could help ease 232 tariffs.

One example: Ford needs Canadian aluminum for F-series trucks. U.S. Treasury Secretary Scott Bessent hinted at a metals deal with Canada to keep American factories moving along smoothly.

Steel & Lumber: Canada’s heavy hitters 💪

As these sectors keep getting tariffed, PM Carney rolled out support for steel and lumber.

The aluminum industry is also knocking on the government’s door for funding to weather the tariffs.

Who’s hit hardest by sectoral tariffs?
Ontario and Quebec. Steel & aluminum exports dropped 11% in June compared to May. Oh dear.

Trump’s untouchables: Section 232 tariffs face few legal challenges and are deemed “essential” by President Trump. Canada can support affected industries but with rising government 💸 spending💸, sustainability is a bit of a question mark.

The 100-thousand-foot view

Soooo, what now?

Well, protectionism is on the rise📈, which is hurting emerging economies, especially in the global south.

Dumping? A growing headache. Some experts warn a “second China shock” could affect countries like Mexico. This means a flood of imports could hit many countries.

As nations get cold feet about the U.S., they remain vulnerable to a surge of cheap imports, a.k.a “overcapacity.”

The fix? Watch transshipment become the new trade buzzword as countries, including Canada, tighten up their supply chains.

That’s all for this edition of the Trade Brief. See you in the next one but in the meantime, here are some interesting trade reads to arm yourself with before the next family dinner political debate.