Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
President Donald Trump announced a 10% increase in tariffs on Canada, further escalating trade tensions between the two nations. The decision, made public on Saturday, Oct 25, 2025, stems from what Trump described as a “fake” and “fraudulent” advertisement from the government of Ontario that featured remarks by former President Ronald Reagan.
Trump posted on Truth Social, accusing Canada of being “caught, red handed, putting up a fraudulent advertisement on Ronald Reagan’s Speech on Tariffs.” He characterized Ontario’s actions as a “serious misrepresentation of the facts, and hostile act,” justifying the additional tariffs “over and above what they are paying now.” The announcement was made aboard Air Force One as Trump began a five-day trip to Asia.
Background on the Advertisement
The controversial Canadian ad, purchased by the government of Ontario and broadcast on major U.S. television networks, included clips from a 1987 speech by Reagan. In the ad, Reagan was quoted speaking against tariffs, stating they hurt “every American worker and consumer” and were “triggering fierce trade wars.”
The Ronald Reagan Presidential Foundation & Institute later commented that the advertisement had misrepresented the former president’s words. Ontario Premier Doug Ford stated Friday that he had spoken with Canadian Prime Minister Mark Carney and that the U.S. ad campaign would pause on Monday to allow trade talks to resume. However, Trump noted the ad continued to run over the weekend during the World Series.
Broader Trade Context
This latest move follows Trump’s earlier threat to terminate trade talks with Canada. It aligns with his broader global trade agenda, which recently saw him impose a 100% tariff “over and above” existing tariffs on China in retaliation for Beijing’s new export controls on rare-earth minerals.
Economic Impact and Relations
Canada remains one of America’s top trading partners, making these trade tensions a significant economic concern. Previous sectoral tariffs imposed by Trump on Canadian exports such as autos, steel, aluminum, lumber, and energy have had a notable impact on Canada’s economy, contributing to its highest unemployment rate in nine years.
Conversely, Canadian boycotts have also affected the U.S. economy, with Canadian travel to the U.S. by land decreasing by 31% through September of the prior year. Exports of American spirits to Canada also reportedly plunged by 85% in the second quarter. Major changes to the U.S.-Mexico-Canada Agreement (USMCA) are anticipated when it undergoes review next year.
Looking Ahead
The imposition of new tariffs underscores the ongoing trade friction between the United States and Canada, ignited by a contentious political advertisement. As President Trump continues his five-day trip to Asia, including meetings with Southeast Asian leaders and Chinese leader Xi Jinping, the focus remains on the trajectory of international trade relations.
