Trump’s global tariff pause may end soon. Experts warn Canada risks new trade levies unless deals are made. Officials eye diversification and U.S. talks.
Looming Deadline Could Reignite U.S. Tariffs
With U.S. President Donald Trump’s 90-day pause on sweeping global tariffs set to expire within days, Canadian trade officials and analysts are bracing for potential fallout. Despite Canada avoiding the initial round of April tariffs, experts say the country is not immune if Trump seeks quick wins to show his trade strategy is working.
Limited Deals Leave Allies Exposed
Announced on April 2, the White House’s “reciprocal tariffs” targeted over 150 countries with levies ranging from 10% to more than 40%. While Canada was not included at the time, Trump paused implementation for most countries shortly after, giving them time to negotiate. So far, only the U.K. and Vietnam have secured agreements. Talks with major economies such as China, the EU, India, and Japan remain unresolved.
Trade expert Inu Manak warned that the lack of finalized deals may push Trump to demand more from countries he perceives as pliable—including Canada. “If he doesn’t get what he wants quickly, he’ll look to squeeze others harder,” she said.
Legal Challenges and Political Calculations
Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose global tariffs remains controversial. A U.S. trade court ruled in May that he had overstepped, but the decision is under appeal. Meanwhile, there are no immediate political or economic penalties for Trump’s aggressive trade stance, giving him flexibility to maintain pressure.
U.S. Treasury Secretary Scott Bessent suggested the tariff freeze may extend to August 1, but warned partners that higher duties will return if no deals are reached. Commerce Secretary Howard Lutnick confirmed that Trump is already setting rates for that possible scenario.
Canada Eyes Diversification Amid Risk
As negotiations continue, Canadian officials are working to reduce dependence on U.S. trade. Fen Osler Hampson of Carleton University noted that Canada could leverage uncertainty to deepen ties with European and Asian markets through existing trade pacts like CETA and the CPTPP.
Prime Minister Mark Carney and Trade Minister Maninder Sidhu have prioritized diversification, recently expanding trade relations with Ecuador and the UAE. However, key markets like China, India, and the U.K. remain diplomatically challenging.
Business Buy-In Key to Trade Shift
Despite government efforts, trade decisions ultimately lie with Canadian businesses. Colin Robertson, a former diplomat, cautioned that firms prioritize ease of access, and the U.S. remains Canada’s most accessible market. “Governments can open doors, but businesses have to walk through them,” he said.
Sidhu acknowledged the concern, saying Canadian companies want broader access but still feel most comfortable dealing with the U.S.
Canada-U.S. Deal in Progress Before July 21
Negotiations for a Canada-U.S. trade agreement are ongoing, with a deadline set for July 21. The digital services tax issue had stalled talks in June, but Canada has since withdrawn the tax, allowing discussions to resume. Hampson believes the deadline could help focus attention on securing a deal.
Robertson said a partial agreement may be enough for both sides. “If Trump sees 80% of a deal and calls it done, that might be sufficient,” he said. “From Canada’s view, that’s a win—because it means we’re off his radar.”
The Stakes Remain High
With global trade tensions rising and U.S. tariffs potentially returning as early as August, Canada must navigate a delicate path. Whether through rapid diplomacy, expanded partnerships, or a narrow U.S. deal, the coming weeks will be critical in shaping Canada’s economic trajectory.
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