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As the world digests Donald Trump’s self-declared tariff day, a heavy fog shrouds what happens next.

But it’s increasingly clear that the president’s rationale for imposing an array of seemingly arbitrary rates on countries’ exports to the US is every bit as political as it is economic.

Take Canada, where Prime Minister Mark Carney won a spring election largely on the premise that he could take on Trump and get the tariffs removed. Since then, the nation has mostly watched from the sidelines as Trump focused on hammering out deals with other trade partners.

Trucks approach the US-Canada border at the Ambassador Bridge in Windsor, Ontario. Photographer: Geoff Robins/AFP/Getty Images

Then yesterday, Trump hiked Canada’s tariff rate to an eye-watering 35% — even as he gave Mexico a 90-day reprieve.

Trump cited a supposed failure to curb an “ongoing flood of fentanyl” into the US. That’s despite statistics showing the amount of the deadly drug intercepted at the northern US border is a tiny fraction of that seized at the Mexican frontier.

His other justification — and what really seems to have piqued him — was Canada’s decision to retaliate.

It’s part of a pattern of economic coercion, including targeting Brazil over its prosecution of former President Jair Bolsonaro and India over its purchases of Russian energy.

In Canada’s case, the headline number is misleading due to a carveout for goods shipped under the USMCA, the trade pact Trump negotiated in his first term. Those put Canada’s effective rate closer to 6% — not so bad compared with most other nations.

To be sure, some Canadian industries, like steel and lumber, are still facing steep levies. But overall, it may benefit the country right now to be left out as Trump strikes lopsided tariff deals elsewhere.

The economic hit is manageable for Carney as long the USMCA exemption remains in place.

But as all leaders have learned, the question with Trump is always how long the status quo will last. — Brian Platt

Mark Carney on Parliament Hill in Ottawa on June 6. Photographer: David Kawai/Bloomberg

Global Must Reads

Among those most surprised by the outcome of Trump’s tariff blitz was Switzerland, which suffered a 39% rate — one of the steepest reciprocal levies globally — threatening to leave the country’s key exports reeling. Laos and Myanmar were meanwhile hit with a 40% import duty — the highest rate in the world behind only Syria at 41%. Here’s a list of all the US tariffs announced.  

China said the US exploited a flaw in Microsoft’s email servers to steal military data and launch cyberattacks on its defense sector. The White House spoke with technology and recycling companies about ramping up production of permanent magnets using rare-earth elements, a key leverage point in the trade war with China, while Treasury Secretary Scott Bessent said he’ll discuss with Trump an extension of the tariff-hike truce with Beijing as negotiations continue.

Colombia’s conviction of ex-President Álvaro Uribe — the country’s first former leader found guilty of crimes — is reopening the wounds of its brutal drug war just as another bout of cocaine violence erupts. With Colombia facing a presidential election next year, the case has polarized a nation that’s struggled to agree on the legacy of Uribe’s hardline security approach, and reignited debates about how to deal with drug-fueled brutality that has long roiled Latin America.

A protest against Uribe in Bogotá on Monday. Photographer: Jair F. Coll/Bloomberg

Ukraine’s anti-corruption officials fear they’ll remain under pressure from President Volodymyr Zelenskiy’s administration even after he backed down over a measure to strip the two main graft-investigation agencies of their independence. Anxiety is lingering that Kyiv may still undermine the bodies through scrutiny on investigators or removing their directors, sources say — concerns one European official said were shared by Kyiv’s allies.

British executives are less confident in economic prospects than when the UK shut down during the pandemic, a survey showed, suggesting Prime Minister Keir Starmer’s government has lost the support of the business community. While the Labour administration put growth at the heart of promises to fix public services and drive investment, it raised taxes on companies to fund its ambitious spending plans and directors aren’t seeing any green shoots in the economy.

Keir Starmer at Downing Street in London on July 14. Photographer: Andy Rain/EPA/Bloomberg

Chinese automakers surpassed a 10% share of Europe’s electric-vehicle market in June, marking a full comeback from tariffs set in place last year by the European Union.

Trump escalated his campaign to pressure pharmaceutical companies to lower drug prices, sending letters to 17 of the world’s largest drugmakers demanding they charge the US what other countries pay for new medicines.

London Heathrow Airport has submitted a proposal to the UK government for a £49 billion ($65 billion) expansion that includes construction of a controversial third runway as the biggest European hub seeks to maintain its competitive edge.

Don’t miss from Bloomberg Weekend: Mishal Husain talks with Israeli bureau chief Ethan Bronner about reporting on the Gaza conflict and how perceptions are changing both inside and outside Israel, while Simon Nixon explains how Trump’s EU deal could cost Europe for years to come. Subscribe to the Bloomberg Weekend newsletter here.

Sign up for the Washington Edition newsletter for news from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television.

Chart of the Day

India told its oil refiners to come up with plans for buying non-Russian crude, a scenario that would have far-reaching consequences for the global market if it ultimately meant reduced dealings with Moscow. The government has asked state-owned processors to prepare an outline of where alternate barrels can be sourced and at what volume if Russian flows get stopped, sources say, with one adding that the instruction amounted to scenario planning in case Russian crude were to become unavailable.

And Finally

In an ordinary garage in central Taiwan, a dozen people clad in helmets, bulletproof vests and goggles stand quietly in formation, airsoft rifles in hand. They’re not soldiers, but civil-defense volunteers learning how to neutralize an enemy in close-quarter combat. Facing the persistent threat of Chinese invasion, a growing number of civilians armed with air guns are signing up for urban warfare courses under a broader Taiwanese government push to improve resilience.

Vega Kung, president of Taiwanese airsoft-gun manufacturer, Vega Force Company. Photographer: An Rong Xu/Bloomberg

Pop quiz (no cheating!). Which country backtracked on an earlier decision to exclude YouTube from its social-media ban for children under 16 years of age? Send your answers to balancepower@bloomberg.net

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