U.S. President Donald Trump intensified his tariff threat on Canada late on Thursday, threatening a 35 per cent tariff on imported goods as of next month.

He sent Prime Minister Mark Carney a letter saying the new rate would go into effect on Aug. 1, though he said it could rise even higher if Canada retaliated. He did also say the rate might "be modified, upward or downward, depending on our relationship with your Country," which again underscores how volatile the trade war has been.

In response, Carney said the federal government is moving ahead with its negotiations with the U.S. The two countries had previously been trying to reach a trade agreement by July 21.

The 35 per cent tariff is an increase from Trump's current 25 per cent tariff on all non-CUSMA compliant goods coming from Canada and a lower 10 per cent rate on energy and potash.