Mark Carney warns of rising tariffs in potential US trade agreement

In recent developments regarding U.S.-Canada trade relations, Prime Minister Mark Carney expressed doubts about achieving a tariff-free agreement with the United States. He stated that there is little evidence suggesting that the U.S. would agree to a deal without including tariffs, despite ongoing discussions and pressures from both sides. Following President Donald Trump's announcement in July 2025 of a 35% tariff on Canadian goods, which is set to take effect on August 1, negotiations have intensified. Carney reaffirmed that Canada would only sign a trade deal that is beneficial to the country, while also acknowledging the changing global trade landscape influenced by Trump's administration. Carney's public acknowledgment of the possibility that tariffs could remain or even increase marks a significant concession in trade negotiations, given that he previously campaigned on a platform of being tough against U.S. trade policies. During his election campaign, which concluded in April 2025, Carney often criticized the former Prime Minister's handling of trade matters, emphasizing a need to pivot Canada’s trade relationships and reduce dependency on the U.S. He stated, “We will need to pivot our trade relationships elsewhere… There will be no turning back.” The backdrop of these negotiations includes Trump's concerns about Canada’s trade barriers, particularly in the dairy sector, where tariffs can reach as high as 400%. Trump's administration has been vocal about what it perceives as unfair trade practices by Canada that contribute to unsustainable trade deficits. In a recent letter to Carney, Trump extended the negotiation deadline, indicating disappointment with the pace of talks and reiterating his administration’s commitment to addressing the flow of fentanyl, another point of contention between the two nations. As the deadline approaches, tensions between Canada and the U.S. could escalate, especially if Carney decides to maintain or impose additional tariffs in retaliation. The Conservative Party, led by Pierre Poilievre, has criticized Carney for his failure to deliver on tough negotiations with the Trump administration, labeling the proposed tariffs as unilateral concessions. In this dynamic political climate, Carney must navigate both domestic and international pressures as he seeks to stabilize Canada’s economic position. The ongoing situation highlights the complexities of modern trade agreements, where economic interests and political strategies often collide, leading to uncertainty for industries reliant on cross-border trade.