🇨🇦 Canada’s Prime Minister Says Tariffs May Be Part of Deal with the U.S.
By Tidbit News Desk
Published: July 16, 2025
Category: International Politics / Business
In a recent update on U.S.-Canada trade relations, Prime Minister Mark Carney has shared that Canada may have to accept some tariffs in any trade deal with the United States. While speaking to reporters before a cabinet meeting in Ottawa, Carney admitted that there isn’t much sign that the Trump administration would agree to drop tariffs entirely. He pointed out that nearly all trade talks led by Donald Trump so far have included tariffs of some kind, which makes it difficult to imagine a new deal without them.
Just last week, former President Trump announced plans to impose a 35% tariff on Canadian goods starting August 1. This announcement follows a pattern of increased trade pressure from the U.S. since Trump first took office. The relationship between the two neighboring countries has been under stress due to both targeted tariffs on Canadian industries and broader global trade measures, many of which have hurt sectors like Canadian steel, aluminum, and auto manufacturing.
Carney’s comment came as a reality check to those hoping for a completely free trade agreement with the U.S. He made it clear that although Canada would continue to negotiate in good faith, the path to a deal would not be free of compromises. During the G7 Summit in June, he had said Canada would only sign an agreement if it genuinely served Canada’s best interests. That position still stands, although now it includes the possibility that some tariffs may be part of the final agreement.
The trade tension is not one-sided. In response to American tariffs, Canada has also taken countermeasures in the past. Though Carney did not confirm whether Canada would retaliate again if the deal failed, he hinted that more counter-tariffs could be considered if the two sides cannot agree.
Adding to the pressure, Trump has already introduced several large-scale tariff policies. These include a 50% global tariff on aluminum and steel imports and a 25% tariff on all cars and trucks not manufactured within the U.S. Just recently, a 50% tariff was also placed on imported copper, which will start next month. All these measures are likely to have a significant effect on Canada's economy, especially since about 75% of Canada’s exports go to the United States.
Canada is known for its automobile production and metal industries, so U.S. tariffs on those sectors are especially damaging. However, it's important to note that a lot of trade between Canada, the U.S., and Mexico is still protected under the United States–Mexico–Canada Agreement, commonly known as USMCA or CUSMA in Canada. According to the latest reports, this agreement is still in place and continues to protect some areas of cross-border trade from new tariffs.
Despite growing tensions, there are signs of continued cooperation. A recent report from the Royal Bank of Canada revealed that although Canada’s exports to the U.S. had slightly fallen since April, more of those exports are now complying with CUSMA rules. The bank said that around 91% of Canadian exports to the U.S. crossed the border without any tariffs, based on data from the U.S. Census Bureau. This shows that the existing trade framework is still strong, even while new threats are being introduced.
In an interview with the BBC, Donald Trump confirmed that discussions with Canada are still ongoing. He expressed optimism, saying the talks are going to work out well. However, the lack of any confirmed deal and the continued announcement of new tariffs are creating concern for Canadian industries and policymakers alike.
Back home, Carney is facing criticism from some political commentators and opposition leaders. They accuse him of backing down too easily in the face of U.S. pressure. Earlier in his term, Carney had taken a tough stance, saying he wouldn’t agree to anything that wasn’t good for Canada. His recent willingness to accept tariffs has raised questions about whether his government is compromising too much.
That said, trade negotiations are rarely simple. Many experts argue that a small number of tariffs might be a price worth paying to avoid a full-scale trade war. The Canadian government now finds itself in a difficult position: standing up for national interests while also protecting billions of dollars’ worth of trade and jobs tied to U.S. markets.
As the August 1 tariff deadline approaches, all eyes are on the final outcome of these trade talks. Canadian businesses, especially in sectors like auto manufacturing, mining, and agriculture, are waiting for clarity. For now, Carney’s message is clear: Canada is open to making a deal, but it's also ready to defend its industries if the talks fall through.
This ongoing negotiation will be critical not only for Canada’s economy but also for the overall future of North American trade. The balance between cooperation and competition remains fragile, and the final terms of this deal could reshape how the U.S. treats its closest trading partner for years to come.
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