Carney says a U.S. trade deal without some tariffs is unlikely

Yahoo

16-07-2025

Prime Minister Mark Carney said Tuesday U.S. President Donald Trump seems wedded to tariffs and any trade deal with the Americans may include accepting some levies on exports.
Speaking to reporters ahead of a cabinet meeting on Parliament Hill about the trade war, Carney said in French that all of Trump's trade agreements to this point have included some tariffs.
He said "there's not a lot of evidence right now" that the U.S. is willing to cut a deal without some tariffs included.
Indeed, Trump's trade arrangement with the U.K., a country with which the U.S. has a trading surplus, includes a 10 per cent baseline tariff.
WATCH | Carney says 'not a lot of evidence' for tariff-free deal:
Carney did not say if he's willing to accept tariffs. At last month's G7 summit after a meeting with Trump, Carney said Canada will sign an agreement "that's in Canada's best interest, and only that."
Carney said under Trump's current framework Canada has "almost free trade" with the U.S. and that's something he wants to see continue. That's a reference to the tariff exemptions granted to Canadian goods that are compliant with the Canada-U.S.-Mexico Agreement (CUSMA).
At the outset of this trade war, the White House estimated some 62 per cent of Canadian exports were not compliant with the trade deal — some companies opted to pay very low duty rates rather than go along with the paperwork required for free access. A recent RBC report suggests compliance has improved since Trump slapped on tariffs and most goods are sold into the U.S. tariff-free.
But Carney said Tuesday "there are obviously problems" with the U.S. sectoral tariffs that do apply universally to steel, aluminum, auto exports and the threatened ones on pharmaceuticals, lumber and copper.
Those so-called Section 232 tariffs have been particularly damaging to the Canadian economy, leading to job losses and a drop in exports.
Those tariffs take their name from the section of a U.S. trade law that allows the president to impose levies on certain goods that are said to threaten "national security."
Catherine Cobden, the president and CEO of the Canadian Steel Producers Association, said in an interview Tuesday there's already been a 30 per cent drop in steel production since Trump first imposed his metals tariff.
"We need to stabilize the situation for Canada," Carney said.
"The government has consistently stood up for Canadian workers and businesses throughout these negotiations. We'll continue to do so. I expect that discussions will intensify between now and the end of the month and we'll be working hard on that."
Conservative Leader Pierre Poilievre said Carney's tariff remarks were "another unilateral concession from a man who said he would never back down to the U.S. president."
Poilievre was previously critical of Carney's decision to scrap the digital services tax that primarily affected U.S. web giants — a move Trump demanded to continue trade negotiations.
Businesswoman Arlene Dickinson, a member of Carney's Council on Canada-U.S. Relations, said tariffs may be inevitable — but there could be a chance to negotiate those away when CUSMA comes up for a review next year.
"I can't believe he's going to allow no tariffs to occur because that's just not his style. It's just not what he wants," Dickinson said of Trump in an interview. She said Trump is "bullying" Canada with his constant tariff threats and "autocratic behaviour."
Last week, Trump sent a letter to Carney saying he's moving to bump the existing 25 per cent border-related tariff rate on Canadian goods — the tariff that does not apply if a good is CUSMA-compliant — to 35 per cent by Aug. 1.
A White House official told CBC News that the CUSMA compliance rule will still apply even if the elevated tariff rate is applied next month.
Trump said it's a trade action designed to force Canada to crack down on fentanyl, even as U.S. government data suggests relatively very little of that drug is seized at the northern border.
Push to dismantle drug trade
Still, the federal government has budgeted more than $1 billion to better police the border for drugs and migrants and law enforcement across the country has been making seizures and arrests as part of a push to dismantle the drug trade.
"If Canada works with me to stop the flow of fentanyl, we will, perhaps, consider an adjustment to this letter," Trump said.
Speaking to reporters on Monday, Trump said that the letters he's sent to Carney and others are what he sees as the "deal" with the respective countries.
"I watched a show this morning and they were talking about, 'Well when's he going to make the deal?' The deals are already made. The letters are the deals. The deals are made. There are no deals to make," Trump said.
If that's the case, Canada could hit back with higher counter-tariffs of its own on U.S. goods — something Trump has warned against.
When Trump hiked the steel and aluminum tariff to 50 per cent last month, Carney withheld matching that rate saying talks are ongoing to get Canada out from under Trump's tariffs.
The prime minister has said Canada's counter-tariffs on U.S. steel and aluminum products will go up if the two sides can't reach a satisfactory deal by month's end.
"We will review our response as the negotiations progress," he said.