Prime Minister Carney warns Canada may face U.S. tariffs under Trump’s trade terms, with steel, auto, and pharma exports at continued risk.
Trade Deal Uncertainty as U.S. Tariff Pressure Grows
As Canada navigates high-stakes trade negotiations with the U.S., Prime Minister Mark Carney has indicated that any new agreement under President Donald Trump will likely include some level of tariffs. His remarks on Tuesday reflect mounting concerns over Trump’s hardline stance and its implications for key Canadian exports.
Tariffs Seen as Part of the Deal
Speaking to reporters ahead of a federal cabinet meeting, Carney said there’s little evidence the U.S. is willing to cut a tariff-free deal. “There’s not a lot of evidence right now,” he noted, adding that Trump’s previous trade agreements have all included levies. He reiterated Canada’s position of only signing a deal that serves its national interest.
Current Trade Framework at Risk
Under the current framework of the Canada-U.S.-Mexico Agreement (CUSMA), many Canadian goods are exempt from tariffs if they meet compliance requirements. While Carney noted that “almost free trade” continues under this setup, he acknowledged ongoing issues with sector-specific U.S. tariffs on steel, aluminum, auto parts, and the threatened expansion to pharmaceuticals and lumber.
Economic Impact of Tariffs
The tariffs imposed under Section 232—targeting goods deemed security risks—have caused significant disruption. Catherine Cobden, CEO of the Canadian Steel Producers Association, reports a 30% drop in steel production since metals tariffs were introduced. Job losses and falling exports have followed. “We need to stabilize the situation for Canada,” Carney said, pledging continued government support for workers and businesses.
Opposition Response and Political Fallout
Opposition Leader Pierre Poilievre criticized Carney’s remarks as another “unilateral concession,” citing previous policy rollbacks such as the cancellation of Canada’s digital services tax under U.S. pressure. He warned against bending to Trump’s demands, especially as negotiations heat up ahead of key trade deadlines.
Leverage and the Fentanyl Dispute
Adding further strain, Trump has threatened to raise border-related tariffs from 25% to 35% by August 1, linking the move to demands for a crackdown on fentanyl smuggling. Despite limited data supporting such claims at the northern border, Trump has called this increase part of a trade “deal” already in motion. Canada, in response, has allocated over $1 billion to border enforcement and drug interdiction efforts.
Looking Ahead to CUSMA Review
With a formal review of CUSMA set for next year, trade experts and business leaders anticipate more challenges ahead. Arlene Dickinson, a member of Carney’s Council on Canada-U.S. Relations, called Trump’s approach “bullying,” but acknowledged that some tariffs may be unavoidable. “The goal now is to negotiate smarter,” she said.
Canada’s Next Moves
While Carney has so far refrained from matching Trump’s latest tariff hikes, he warned that retaliatory tariffs could be imposed if negotiations fail. Talks are expected to intensify over the coming weeks as both nations seek to reshape the trade relationship under renewed political pressure.
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