New trade deal with the U.S. likely to include tariffs, Mark Carney says

“There’s not a lot of evidence right now from the deals, agreements and negotiations with the Americans, for any country or any jurisdiction, to have a deal without tariffs,” he told reporters in French ahead of a cabinet meeting to discuss trade negotiations.

It was the first such public admission from Carney, although he had recently expressed some doubt as to whether Canada would be able to immediately lift some of U.S. President Donald Trump’s tariffs during trade talks.

In doing so, Carney shifted the tone from that of Canadian officials who have argued that the goal is to remove all tariffs on exports to the U.S., despite the White House’s insistence that some tariffs are here to stay.

To the head of the association representing Canada’s manufacturing industry, Carney is simply bowing to reality.

“Based upon what’s happened with other trading partners, he’s probably correct,” said Dennis Darby, president of Canadian Manufacturers and Exporters. “The U.S. clearly isn’t in the mood to have tariff-free trade.”

But to those pushing for a more hawkish approach to Trump’s trade war, it was an unacceptable concession after Canada already repealed its digital services tax and ramped up its defence and border security spending in response to Trump’s concerns.

“We should call this what it is. It’s extortion by the United States,” said Unifor president Lana Payne, who said normalizing the idea of tariffs could result in Trump pushing things even further, and urged Canada to push back with every tool at its disposal.

“The challenge we have is that we’re dealing with someone who continues to change the goalposts,” Payne said. “Giving things away up front has not worked for us.”

Conservative Leader Pierre Poilievre, who has previously expressed support for the Liberal government’s efforts to get a trade deal done, also slammed Carney’s comments on Tuesday.

“Another unilateral concession from a man who said he would never back down to the U.S. president,” Poilievre wrote on social media.

Premier Doug Ford, a close Carney ally, has long said his goal is for “zero tariffs” between Canada and the U.S. If that cannot be achieved, Ford has urged Ottawa to retaliate forcefully with counter-tariffs.

“You know, if the president doesn’t come to the table, I’ll give (Carney) my full support on full-out tariffs of 50 per cent on steel,” the premier said last month.

“If the president comes and says, ‘We’re putting 10 per cent (tariffs) across the board,’ well, we need to put 10 per cent (Canadian counter-tariffs) across the board and make sure that we protect our manufacturers here,” Ford said June 19.

The prime minister’s comments came a day after Trump declared that the letters he sent to Carney and other world leaders about new tariff rates represent done deals.

“The deals are made. There are no deals to make,” Trump said during an Oval Office meeting with NATO Secretary-General Mark Rutte. “They would like to do a different kind of a deal and we are always open to talking.”

In the letter sent to Ottawa Thursday night, Trump threatened to unilaterally impose a 35 per cent tariff on imports from Canada by Aug. 1, which pushed back the deadline to secure a deal and delayed a host of Canadian counter-tariffs scheduled for July 21.

He also took aim at Canada’s supply management system and accused the Canadian government of failing to prevent fentanyl from crossing the border, despite Canada being a minor source of the fentanyl going into the U.S., and an investment of more than $1 billion to address the problem.

A White House official later suggested that the new tariff would only apply to goods that already face a 25 per cent tariff, which would exempt goods that comply with the Canada-U.S.-Mexico Agreement (CUSMA) — about 50 to 60 per cent of Canadian exports to the U.S., experts say. However, the official indicated no decision was final, and a Carney government official said that was not yet clear.

Aside from the non-CUSMA compliant goods hit with a 25 per cent tariff, energy and potash imports from Canada face a 10 per cent tariff. Trump has also levied what is now a 50 per cent tariff on steel and aluminum and a 25 per cent tariff on automobiles for most of the world.

In the face of that confusion, Carney, who is expected to brief the premiers on Ottawa’s next steps before the start of their annual gathering on July 22 in Huntsville, Ont., said Tuesday his goal is to “stabilize” the situation for Canada. He described the current tariff situation as “almost free trade” between the neighbouring countries while arguing the “effective tariff” against Canada is among the lowest in the world — a reference to the exemption for CUSMA-compliant goods exempt from tariffs so far.

“But there are obviously problems in the steel, automotive, aluminum, pharmaceutical, lumber and other sectors,” he said, “so we need to stabilize the situation for Canada.”

International trade lawyer John Boscariol said focusing on keeping the exemptions Canada has under CUSMA — as well as getting rid of sector-specific tariffs on autos, steel and aluminum — would be the best approach.

“Given what’s happened to date, coming away with a deal that exempts CUSMA-originating goods from any tariffs and addresses the … tariffs on autos, steel and aluminum will be viewed by many as a win,” said Boscariol, head of the trade law group at McCarthy Tétrault. He added that trying to stave off tariffs on planes, engines, trucks, copper, pharmaceuticals and critical minerals would be even more vital.

Still, Trump’s penchant for throwing last-minute wrenches into negotiations — as he did with his sudden threat to call off talks with Canada because of the since-repealed digital services tax — keeps everyone, including his own negotiators, off-balance, Darby said.

“Godspeed to (Intergovernmental Affairs Minister Dominic) LeBlanc and (Canadian Ambassador to the U.S. Kirsten) Hillman, and even the Americans. They probably find out about some of these things at the same time we do,” said Darby.

With files from Robert Benzie.