Trump Says US and Canada May Not Reach Trade Deal

U.S. President Donald Trump says his country may not be able to reach an economic agreement with Canada, which may end up having to pay higher tariff rates.

“We haven’t really had a lot of luck with Canada. I think Canada could be one where they’ll just pay tariffs; not really a negotiation,” Trump said while speaking to reporters at the White House on July 25.

Trump said the United States is working “very diligently” to make progress on a deal with the European Union and other countries like China, but that “we don’t have a deal with Canada.”

The U.S. president said that “close to 200” countries are set to receive letters on Aug. 1 outlining the tariffs they will pay to the United States.

“When those letters go out … that means they have a deal—it’s done. They pay that tariff and that is a contract,” he said.

Trump sent a letter to Canada on July 10 warning that it would pay 35 percent tariffs on all goods not covered under the United States-Mexico-Canada Agreement (USMCA) beginning on Aug. 1, which is up from the current 25 percent tariffs. Trump also said in the letter that the tariffs would be increased if Canada retaliated with counter-tariffs.

The broad 25 percent tariffs were placed on Canada related to Trump’s border security concerns, citing fentanyl and illegal migrants coming into the United States from Canada. Ottawa has since implemented several measures in response, such as $1.3 billion for border security and the appointment of a “fentanyl czar.” Washington, however, has indicated it would like to see further action.

Trump has also implemented 50 percent tariffs on Canadian steel and aluminum, 25 percent tariffs on cars and auto parts, and 10 percent tariffs on oil and potash. The U.S. president has said he will soon be levying global tariffs on pharmaceuticals, copper, and semiconductors.

Negotiations

Following the July 10 letter, Prime Minister Mark Carney pushed back the Canadian government’s self-imposed deadline for a trade deal with the United States, from July 21 to Aug. 1. Carney and Trump had previously agreed on June 16 at the G7 summit in Canada to reach a deal within 30 days.

Speaking to reporters on July 15 in Ottawa, Carney said a trade deal with the United States may ultimately still include tariffs on Canada, as there was “not a lot of evidence right now” that any countries have been able to achieve a trade agreement with the United States that doesn’t include tariffs.

The United States has made a trade deal with Japan that includes 15 percent tariffs on all goods on top of a $550 billion investment in the United States. A U.S. trade deal with Vietnam includes 20 percent tariffs, and a deal with Indonesia  includes 19 percent tariffs.

Carney said that Canada has “almost free trade” with the United States, despite higher tariffs on some industries, because goods under the USMCA are tariff-free.

During a meeting with Canada’s premiers on July 22, Carney said the discussions with the United States are “complex” and Ottawa would use “all the time that’s necessary and agree on something that’s in the interests of Canadians, if that’s available.”

Ontario Premier Doug Ford said during the meeting that Trump was “unpredictable” and that Ottawa needed to be ready to launch counter-tariffs on the United States, while Alberta Premier Danielle Smith said it appeared the United States would be “putting off” the renegotiation of USMCA until 2026, which was “disappointing.”

Canada-U.S. Trade Minister Dominic LeBlanc said on July 24 that he was feeling “encouraged” after meeting with U.S. Commerce Secretary Howard Lutnick and American lawmakers in Washington, D.C., and that he would return to the city next week for more meetings. He said Ottawa would take the time needed to reach a deal that is in the best interest of Canadians.

Matthew Horwood is a reporter based in Ottawa.

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