Prime Minister Mark Carney announced Thursday that Canada is actively engaged in negotiations for a comprehensive trade deal with the United States. However, he also stated that Canada is prepared to implement responsive measures should President Donald Trump's threat of imposing 50% tariffs on Canadian goods materialize.
These potential tariffs, announced by Trump on Monday, are slated to take effect on August 19. "If these tariffs, or other measures come into force, there’s a full range of things that we can do in that regard," Carney said following a meeting with Canada's premiers and territorial leaders in Charlottetown, Prince Edward Island.
Carney indicated that all options remain on the table if an agreement cannot be reached before the deadline. He believes responding in advance would be counterproductive at this stage.
The proposed tariffs would affect a broad spectrum of goods, including honey, liquor, cement, dairy products, certain wood products, and hockey sticks. While energy products, potash, fish, and critical minerals are excluded, the tariffs would encompass goods previously protected under the United States-Mexico-Canada Agreement (USMCA), a 2020 trade pact that was not renewed by the U.S., initiating new negotiations potentially extending until 2036.
Carney suggested that the tariff threat might be a negotiation tactic employed by the U.S., noting a pattern of recent trade negotiations where deadlines and outsized tariffs are often used.
He expressed confidence in the willingness of U.S. officials to finalize a trade deal. Prince Edward Island Premier Rob Lantz emphasized a united front between the provinces and the federal government, advocating for a "Team Canada" approach. Carney affirmed that Canada will continue to diversify its economy and forge trade relationships beyond the U.S.
An analysis by Desjardins, a major Canadian financial institution, estimates the tariffs could impact approximately 28 billion Canadian dollars ($19.8 billion) in annual Canadian exports to the United States, representing about 5% of U.S. imports from Canada. The analysis also warned that heightened uncertainty could negatively affect business confidence and investment plans. Ontario, Quebec, and British Columbia are anticipated to be the most affected provinces.
Ontario Premier Doug Ford had previously stated the need for Canada to demonstrate strength and adopt an offensive strategy. He indicated that Ontario, which has the most to lose, would take all necessary measures to protect its citizens.
Later on Thursday, the Trump administration also cited forced labor in supply chains as a reason for imposing tariffs on dozens of countries, including Canada. Dominic LeBlanc, Canada-U.S. Trade Minister, described the move as "not unexpected" and stated that Canada shares the U.S. objective of preventing goods produced with forced labor from entering the supply chain. He added that Canada would continue constructive engagement with the U.S. on this and other outstanding issues.