Canada–U.S. Trade War Heats Up: Navigating the New 35% Tariffs

The Canada–U.S. trade relationship has entered a turbulent new chapter. As of August 1, 2025, the United States has increased tariffs on non-CUSMA-compliant Canadian goods from 25% to 35%. This escalation is part of a wider trade strategy aimed at enforcing stricter import controls, addressing illicit trafficking concerns, and pushing for greater trade parity.

While over 85% of Canada–U.S. trade remains duty-free under CUSMA, the remaining flows, particularly in sectors where compliance documentation is inconsistent,  now face significant additional costs. Attempts to avoid the tariff through transshipment are met with an even steeper penalty rate of 40%.

What This Means for Brokers and Forwarders

For customs brokers and freight forwarders, the new tariff environment creates both operational and advisory challenges. Determining CUSMA eligibility with absolute accuracy is now very critical. A single misclassification can lead to unexpected duty liabilities, shipment delays, or penalties.

Cost forecasting will also need immediate attention. A 35% duty can fundamentally alter landed costs, impacting pricing strategies, client margins, and even supply chain viability. The shift will require closer coordination between compliance teams, operations, and client management to keep shipments moving while minimizing exposure to risk.

The Economic Context

The tariff hike comes at a time when Canada’s trade deficit has widened to C$5.9 billion in June, with a notable drop in exports to the U.S. Analysts warn that higher tariffs could slow cross-border trade further, particularly for goods in manufacturing, agricultural, and specialty sectors that rely on just-in-time delivery models.

For the logistics sector, this environment demands faster decision-making, more robust compliance procedures, and the capacity to process a higher volume of detailed entries under greater scrutiny.

How Portway Can Help You

Portway International works alongside brokers and forwarders to absorb exactly this kind of market shock. As your Business Process Outsourcing (BPO) partner, we can:

• Verify CUSMA status for every shipment, ensuring duty-free treatment is applied wherever possible.
• Model landed costs so clients understand the impact before goods are in motion.
• Review documentation to eliminate errors that could trigger delays or penalties.
• Expand your processing capacity to handle the increased workload without compromising service levels.
  

With the right preparation, you can turn this trade shift into a moment to strengthen your client value, rather than scramble to contain disruption. Our team is ready to start that preparation with you today!

📩 Let’s talk about your tariff-readiness plan before your next shipment hits the border.

Sources:

https://apnews.com/article/969a4cfb03638ce9d6c0ffad2b98b4b1

https://nypost.com/2025/08/07/us-news/trumps-higher-tariff-rates-hit-goods-from-major-us-trading-partners/

https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-amends-duties-to-address-the-flow-of-illicit-drugs-across-our-northern-border/

https://www.ft.com/content/791b84a5-7e6c-4e44-a2af-7e59ebbe4c7d

https://www.reuters.com/world/americas/canadas-trade-deficit-widened-c59-billion-june-2025-08-05/

https://www.washingtonpost.com/business/2025/08/07/trump-tariffs-global-trade/