Trump threatened to escalate tariffs beyond 35% if Canada opts to retaliate with tariffs on U.S. goods. Canadian goods are also subject to sector-specific tariffs, such as 50% levies on steel and aluminum as well as 25% tariffs on non-USMCA compliant autos and auto parts.

The S&P 500 followed a record-breaking Thursday by dipping 0.33% Friday after President Donald Trump said he would impose a 35% tariff on Canada on August 1. The stock market dipped on Friday after President Donald Trump issued his latest tariff threat against Canada.

Trump this spring imposed a 25% tariff on cars and car parts, including those from Canada. But certain cars and parts qualify for preferential treatment under the USMCA, meaning the 25% tariff applies only to the non-U.S. content of the automobile or part.

Canada has made concessions to win goodwill with the White House. Trump, in return, has threatened steeper tariffs.

President Donald Trump published a letter to Prime Minister Mark Carney on Thursday, accusing Canada of having "financially retaliated" against the U.S.