U.S. President Donald Trump attends the "Making Health Technology Great Again" event at the White House in Washington, D.C, the United States, on July 30, 2025. (Xinhua/Hu Yousong)

US President Donald Trump on Thursday signed an executive order increasing the tariff on Canada from 25 percent to 35 percent, with the higher tariff set to go into effect on Aug. 1, the White House said in a fact sheet.

"Canada has failed to cooperate in curbing the ongoing flood of fentanyl and other illicit drugs, and it has retaliated against the United States for the president's actions to address this unusual and extraordinary threat to the United States," said the fact sheet.

The White House said that in response to Canada's "continued inaction and retaliation," Trump has found it necessary to increase the tariff on Canada to "effectively address the existing emergency."

Goods qualifying for preferential tariff treatment under the United States-Mexico-Canada Agreement (USMCA) will continue to remain exempt from the new tariffs. Goods transshipped to evade the 35 percent tariff will be subject, instead, to a transshipment tariff of 40 percent.

The fact sheet addressed the presidential action as "necessary and appropriate to protect American lives and the national security and foreign policy of the United States."

In February, Trump signed an executive order to impose an ad valorem duty rate of 25 percent on imports from Canada in response to the national emergency. In March, he determined that Canada had failed to adequately address the situation and proceeded with the imposition of the 25 percent tariff, according to the fact sheet.

"Now, President Trump is taking further action to hold Canada accountable for its continued role in the illicit drug crisis," the White House said.

On Thursday, Trump also announced so-called "reciprocal tariff rates" of up to 41 percent on many countries.

In April, Canada imposed 25-percent tariffs on U.S. vehicles that didn't meet CUSMA rules and on non-Canadian, non-Mexican content in vehicles imported under CUSMA, as countermeasures, said its government.

Canada was the top buyer of U.S. exports last year, importing 349 billion dollars worth of goods, while exporting 413 billion dollars to the United States as its third-largest source of foreign goods, according to the U.S. Department of Commerce.