Carney ‘disappointed’ by 35% tariffs on Canada, most products exempt
Canadian Prime Minister Mark Carney expressed disappointment over President Donald Trump’s imposition of 35% tariffs on certain Canadian goods, which Trump justified as a response to fentanyl crossing the U.S.-Canada border. Carney disputed this reasoning,highlighting Canada’s significant efforts to combat the illicit drug trade. However, he remained optimistic due to exemptions provided under the U.S.-Mexico-Canada Agreement (USMCA), which allows many Canadian exports to enter the U.S.duty-free if they meet certain criteria, such as using North American materials or undergoing ample conversion in North America.
Carney acknowledged that while sectors like lumber, steel, aluminum, and automobiles will be heavily affected by the tariffs, most other key industries, including copper, semiconductors, pharmaceuticals, and electronics, will be largely unaffected. He committed to protecting Canadian jobs, strengthening domestic markets, and diversifying export destinations.
Despite the tariffs, the overall trade relationship between the two countries remains functional, with Trump indicating openness to further trade discussions.However, tensions have increased partly due to Canada’s recognition of a Palestinian state, a move opposed by the U.S.and seen as complicating trade negotiations further. Retaliatory Canadian tariffs on certain U.S. goods are expected soon.
Carney ‘disappointed’ by 35% tariffs on Canada but USCMA exemption gives hope
Canadian Prime Minister Mark Carney voiced disappointment in President Donald Trump’s 35% tariff announcement, but sounded optimistic over exceptions through the U.S.-Mexico-Canada Agreement.
Trump announced 35% tariffs on some Canadian goods, justifying the move as being due to the continued flow of fentanyl across the Canada-U.S. border. In a statement posted on X, Carney pushed back against the logic, saying Ottawa had invested heavily in combating the illicit drug trade. He also noted that Canada was “disappointed” in the new tariffs, but remained committed to the USMCA.
“The U.S. application of [USMCA] means that the U.S. average tariff rate on Canadian goods remains one of its lowest for all of its trading partners,” he said. “Other sectors of our economy — including lumber, steel, aluminum, and automobiles — are, however, heavily impacted by U.S. duties and tariffs. For such sectors, the Canadian government will act to protect Canadian jobs, invest in our industrial competitiveness, buy Canadian, and diversify our export markets.”
Carney also pledged to keep “building Canada strong,” focusing on its domestic market.
While the 35% tariff is one of the largest levied against a major U.S. trading partner, Trump’s commitment to the USMCA exceptions means that much of the Canadian economy will be unaffected.
The USMCA gives duty-free treatment for materials produced in the United States, Mexico, or Canada, provided importers or manufacturers have a Certificate of Origin proving it. Products wholly manufactured using materials originating in North America; materials from North America, such as American lumber, Mexican avocados, and Canadian mineral ores; products that undergo “substantial transformation” in North America; and products that meet a regional content/costs requirement are all exempt from tariffs.
Carney’s optimism appears well-founded — roughly 90% of Canada’s exports to the U.S. in May were USMCA-exempted, according to Reuters. The tariffs will only be harshly felt on specific industries, mainly Canada’s aluminum, lumber, steel, and automobile industries, as pointed out by Carney. Important industries such as copper, semiconductors, some critical minerals, pharmaceuticals, computers, and phones will be unaffected.
Despite his hostile rhetoric against Canada, Trump has enjoyed a generally positive relationship with Carney. He told reporters on Thursday that he was open to further trade discussions and could speak with Carney later that evening.
Retaliatory tariffs from Canada on non-USMCA-exempt U.S. goods are expected soon.
TRUMP’S LATEST TARIFF ORDER ENACTS LEVIES ON AUG. 7; CANADIAN RATES INCREASE TO 35%
Trade negotiations between the U.S. and Canada have also been complicated by unrelated political factors, such as Ottawa’s Wednesday decision to recognize a Palestinian state, opposing the U.S.’s stance. Trump suggested that the move could harm trade negotiations.
“Wow!” Trump wrote on Truth Social. “Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!”
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