Speaking to reporters on his way into the office ahead of a virtual cabinet meeting, Prime Minister Mark Carney predicted trade talks 'will intensify' ahead of the Aug. 1 deadline.Spencer Colby/The Canadian Press
Prime Minister Mark Carney says he sees little evidence that it’s possible to strike a deal with President Donald Trump that removes all U.S. tariffs on Canadian goods.
This is the first time the Prime Minister has acknowledged that a pact to end the Canada-U.S. trade war would likely leave some of Mr. Trump’s protectionist tariffs in place.
The two countries are in negotiations to resolve a conflict that has seen both sides impose tariffs, starting with Mr. Trump in March.
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As talks continue, Mr. Carney is scheduled to visit a steel manufacturing company in Hamilton, Ont., Wednesday where he will announce support for Canadian steelworkers, a source said. The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.
Talking to reporters on his way into the Prime Minister’s Office ahead of a virtual cabinet meeting on Tuesday, Mr. Carney predicted trade talks “will intensify” ahead of the Aug. 1 deadline.
Speaking in French, he added that he doesn’t believe a pact can be struck that removes all tariffs.
“There is not much evidence at this moment of agreements, arrangements, or negotiations with the Americans for any country, any jurisdiction, to have a tariff-free deal,” Mr. Carney said.
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This prospect of permanent U.S. tariffs has emerged even though Mr. Carney killed the digital sales tax to get Canada-U.S. trade talks back on track after Mr. Trump broke off negotiations in June. The Prime Minister rescinded the tax just before the first payments were due.
The DST – which would have applied to U.S. tech giants such as Amazon, Google parent Alphabet, Meta, Uber and Airbnb − had imposed a 3-per-cent levy on Canadian revenue from digital services exceeding $20-million earned by companies with at least $1.1-billion in global revenue.
William Pellerin, a partner with McMillan LLP’s international trade group, said Mr. Carney may be lowering expectations for what Canadians and Canadian businesses can anticipate from a trade deal with Mr. Trump.
He said he and his clients must now prepare for the possibility that U.S. tariffs are here to stay for the long term and that any Canadian business that made a short-term decision to “eat the tariffs rather than passing them on” to U.S. buyers may have to rethink that.
Mr. Carney’s comments “could also be a trial balloon that he’s floating to Canadians and to the markets to see how people react,” Mr. Pellerin said.
Britain, which struck a trade agreement with Mr. Trump in June, still faces 10-per-cent baseline tariffs on products it sells to the United States. Similarly, Vietnam ended talks with the White House with a residual 20-per-cent levy on goods it sells to the U.S. And Mr. Trump said Tuesday that Indonesia had agreed to a 19-per-cent tariff on exports to the U.S.
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Conservative Leader Pierre Poilievre accused Mr. Carney of yielding ground to Mr. Trump.
“The Prime Minister is now conceding that American tariffs on Canada will be part of an eventual deal,” Mr. Poilievre said in a post on X.
“Another unilateral concession from a man who said he would never back down to the U.S. President.”
Mr. Carney noted that Canada has a trade agreement with the United States and Mexico – the USMCA – that regulates trade but said Ottawa and Washington must address sectors that Mr. Trump has targeted with tariffs or threats of tariffs.
“There are problems, obviously, in the automobile, steel sector, aluminum, pharmaceuticals, and other areas that all need to be addressed. We need to stabilize the situation for Canada,” he said.
The Prime Minister said Canadians “need to recognize the commercial landscape globally has changed” in a fundamental manner because of Mr. Trump. “We will continue to focus on what we can most control, which is building a strong Canadian economy,” he said.
He emphasized that this includes a strong steel industry, “a strong Canadian auto industry, a strong Canadian aluminum industry, copper industry, and others.”
Mr. Carney said his government will be focused on what it can do to achieve this.
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International trade lawyer Lawrence Herman said any notion of free trade with the United States is over.
“There are no rules that Trump respects, whether global or under separate trade agreements like USCMA,” Mr. Herman said. “Trump’s policy is totally grounded in using tariffs and tariff threats to make deals.”
He said it makes sense to seek stability in trade relations with the United States but cautioned against a repeat of what he called the “one-sided deal” obtained by Britain − where Mr. Trump can change the tariff rate by executive order if he wishes.
Mr. Herman warned that the USMCA renegotiations in 2026 will bring more trade instability as the deal comes up for renewal. “My expectation is that the USMCA review will face diktats by Trump for one-sided changes that, if not accepted by Canada and Mexico, could lead to the U.S. walking − which can be done with six month’s notice.”
Goldy Hyder, president of the Business Council of Canada, said Canada needs to focus on achieving the lowest baseline tariff possible – and seek as many exemptions as possible from tariffs already in place.
He said he believes that Canada is in a good position, given the high degree of economic integration with the United States, to negotiate the lowest tariff rate in the world among countries cutting deals with Mr. Trump.
Mr. Hyder said the prospect of permanent tariffs is another reason why Canada needs to diversify more of its trade to markets other than the United States.
“It’s become clear that free trade with United States is no longer free. It comes with a price of entry,” he said.
Canadian agricultural producers are urging Ottawa not to settle for broad-based tariffs on all goods.
“Right now, Canada’s agri-food exports have tariff-free access to the U.S., and we think it is really important not to sacrifice that in order to solve issues for other industries,” said Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance. “It’s very important that the country not accept broad-based tariffs on everything.”
The vast majority of Canadian agricultural exports to the U.S. are USMCA compliant, he said.
Meanwhile, the Prime Minister spoke with Mexican President Claudia Sheinbaum Tuesday, according to the PMO. Mr. Carney thanked his counterpart for the efforts of Mexican firefighters in Manitoba, and the two also discussed economic issues, the PMO said.
With a report from Kate Helmore in Vancouver