Faced with yet another trade standoff between the United States and Canada, diplomatic tensions between the two countries are once again escalating. Donald Trump’s new tariff increase and Prime Minister Mark Carney’s firm stance rekindle uncertainty about the future of the bilateral relationship. This marks a break in negotiations and represents a period of heightened economic tension between the neighboring countries.
Trump raises tariffs and threatens the stability of the trade agreement
The Canadian team working on a trade deal with the United States could walk away from talks in the wake of a U.S. decision to impose a 35% tariff on some goods from Canada, an adviser to Prime Minister Mark Carney said on Friday. Flavio Volpe, a member of Carney’s hand-picked Council on Canada-U.S. Relations, told CBC News that the negotiators would stay in Washington for the time being.
President Donald Trump on Thursday signed an executive order increasing tariffs on Canadian goods to 35% from 25% on all products not covered by the U.S.-Mexico-Canada trade agreement. The White House cited what it said was Canada’s failure to stop fentanyl smuggling and a failure to address U.S. concerns about trade barriers.
“Team Canada is still in Washington working on a deal and they’re going to be there until we either have a conclusion of a good deal for Canada or that it’s time to take a pause and walk away,” said Volpe, president of Canada’s national Automotive Parts Manufacturers’ Association. Carney wants a new deal to reset bilateral relations, saying Trump’s move to impose tariffs had irrevocably upended the decades-old trading and security ties between the two neighbors. The talks though have so far produced little.
Canadian political climate influences response to US pressure
Washington is also unhappy about Canada’s refusal to drop its own countermeasures, which were first imposed by former Prime Minister Justin Trudeau. He resigned in March to be replaced by Carney, who won an April election on the back of a promise to stand up to Trump. In June, Carney had threatened to ramp up counter tariffs in July unless there was progress on the deal. A statement he issued early on Friday did not mention retaliation at all.
Although Carney avoided mentioning immediate retaliation, his election was based precisely on his promise to adopt a more assertive stance toward Washington. Unlike his predecessor, Carney is betting on strategic hardening to defend Canadian interests, even if it means the risk of a breakdown in negotiations.
Diplomatic isolation puts pressure on Canadian strategy
Brian Clow, a senior Trudeau aide who was in charge of U.S. relations inside the prime minister’s office for several years, noted that Trump had announced a number of deals with nations that declined to impose counter tariffs. “Unfortunately, Canada stands on its own right now, along with China, because many other countries around the world refused to stand up to this President,” he said by phone. “So I’m not sure that further retaliation is the way to go here.” The offices of Carney and Dominic LeBlanc, the federal cabinet minister leading the Canadian team in Washington, were not immediately available for comment.
team in Washington, were not immediately available for comment.
Clow’s comment highlights the fragility of Canada’s position on the international stage, especially alongside countries like China that also resisted Trump’s trade demands. The lack of support from other nations intensifies pressure on Ottawa, which must now choose between solitary resistance or strategic rapprochement to avoid broader economic losses.
Economic risks rise with prolonged impasse
The growing tension between Ottawa and Washington highlights the challenges faced by leaders trying to balance economic sovereignty and diplomacy.
With negotiations stalled and the risk of mutual retaliation, the future of bilateral trade remains uncertain. The outcome of these negotiations could redefine Canada’s role in global trade chains in the coming years.
GCN.com/Reuters