An Indian trade delegation has also reached Washington for fresh talks on a trade deal with the United States.

US President Donald Trump has announced that all imports from Canada will have a 35% tariff as of August 1. He sent a letter to the country’s president, Mark Carney, informing him of the new rate, which has also been posted on his Truth Social account.

A NITI Aayog report indicates that higher US tariffs on countries like China and Mexico could give Indian exporters a competitive advantage in sectors such as pharmaceuticals and textiles. India is poised to gain in a significant number of trade categories,

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 tariffs are likely to inflame tensions with one of the largest U.S. trading partners.

The Aayog also pointed out that "India stands to gain in sectors with high tariff gaps vs China, Canada and Mexico -- minerals and fuels, apparel, electronics, plastics, furniture, and seafoods in a USD 1,265-billion market".

On Thursday, the president announced a 35 percent tariff on all Canadian goods not covered by the United States-Mexico-Canada Agreement (USMCA) to take effect on August 1, unless a trade deal is reached before then.

Note: Goods from Canada and Mexico that fall under the U.S.M.C.A. trade pact — the agreement that replaced NAFTA — are not subject to tariffs that took effect in March targeting those countries.