The letter reiterated Trump’s complaints about dairy quotas, fentanyl and the U.S. trade deficit, which is mostly fueled by American refineries’ thirst for Canadian oil. His social media post caused the Canadian dollar to immediately tumble, indicating the market wasn’t expecting this escalation.

Canada is one of the United States' top trading partners, with more than $410 billion of goods crossing into the country last year.

Trade tensions between the US and Canada escalate as President Trump threatens a 35% tariff on Canadian goods. This move jeopardizes the USMCA and could have significant economic repercussions for both nations.

If implemented, Trump's new 35 percent duties will be "separate from all Sectoral Tariffs," such as the 50 percent tariff on steel and aluminum imports. Trump also promised that, if Canada raises its own tariffs in response, then "whatever number [Canada chooses] to raise them by, will be added onto the 35% that [the U.S. charges]."

Donald Trump surprised markets late Thursday with a letter announcing a 35% tariff on Canadian goods, but some notable industries such as energy could get some relief from the new threat.

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