Carney says US-Canada trade deal likely to include some tariffs

Canadian Prime Minister Mark Carney indicated that Canada might need to accept some tariffs as part of a future trade agreement with the United States. He stated there is little evidence the Trump administration would completely abandon levies in any deal, noting that all of President Trump's past trade negotiations have included tariffs. This comment was made ahead of a cabinet meeting in Ottawa.

The context is an ongoing trade war since Trump took office, marked by US tariffs on Canadian goods and Canadian countermeasures. Last week, President Trump announced a new 35% tariff on Canadian goods set to start August 1st, replacing the current 25% rate which includes exemptions. Trump has also imposed global tariffs, including 25% on steel and aluminium and 25% on non-US built cars and trucks, plus a recently announced 50% tariff on copper imports effective next month.

Prime Minister Carney did not explicitly state if he would accept tariffs in a deal but reiterated he would only sign an agreement "that's in Canada's best interest." He also warned Canada is prepared to impose further counter-tariffs if no deal is reached with Washington.

These US tariffs are particularly damaging to Canada as it sends about three-quarters of its exports to the US, especially in vulnerable sectors like auto manufacturing and metals supply. However, the US-Mexico-Canada Agreement (CUSMA) currently exempts much of the cross-border trade between the US, Canada, and Mexico from additional levies. US media reports confirm the agreement remains in effect.

Despite Canada's exports to the US declining since April, compliance with CUSMA has increased. Data cited from the US Census Bureau shows approximately 91% of Canadian exports to the US crossed the border duty-free.