Newly elected Canadian Prime Minister Mark Carney is preparing for his upcoming visit with President Donald Trump at the White House. This meeting is taking place amid rapidly escalating trade tensions between the two nations. This convening comes on the heels of Canada’s muscular response to U.S. tariffs. These tariffs have thoroughly disrupted our strong bilateral trade relationship.
Over the past few months, as a response to American tariffs, Canada has slapped a 25% tariff on C$30 billion (about $22 billion) worth of U.S. imports. This action was taken in direct response to the tariffs that President Trump placed on Canadian steel and aluminum. These tariffs were just one piece of his larger trade policy. The Canadian government has retaliated with a 25% duty on C$29.8 billion (about $22 billion) worth of U.S. goods. Whatever their reasons, this action clearly signals their desire to deeply and fundamentally oppose American trade practices.
The trade war has been the impetus for one of the largest shifts in Canadian consumer habits in decades. Our Buy Canadian campaign inspired thousands of Canadians to look for alternatives to American made goods. Regardless of the understanding behind it, this trend signals an increasing unwinding effect caused by the tariffs on both economies. In a recent news conference held at Parliament Hill in Ottawa, Prime Minister Carney remarked, “We are over the shock of the American betrayal but we should never forget the lessons.” His comments express what many Canadians feel about our unhealthy trade relationship.
Canada’s producers are now threatened by the imposition of new tariffs. Though distinct and ever tense, let’s not forget that the United States remains Canada’s second-largest trading partner and one of its closest allies. During 2024, the U.S. exported $349.4 billion in goods to Canada, which has been the leading destination for American exports for 12 years running. In fact, Canada is 14% of all U.S. trade, underscoring the strong economic interdependence between the two countries.
The continuing trade conflict has aimed specifically at industries that are more dependent, such as steel and aluminum industries on Canadian imports. Canada is integral to overall U.S. softwood lumber imports, providing more than four-fifths of the sum. In truth, more than 30% of the softwood lumber used in the United States is Canadian in origin. The tariffs have thrown a wrench into this supply chain and added significant uncertainty to an already volatile construction and housing market in the U.S.
Likewise, the United States-Mexico-Canada Agreement (USMCA) was ratified in 2020. The purpose of the agreement is to level the playing field for trade in North America, addressing a myriad of complex issues. On Mexico and Canada goods, a 25% tariff still applies, despite the origin of the imported goods. This tariff extends to anything outside of that trade agreement. As Prime Minister Carney prepares to meet with President Trump, it is uncertain how these longstanding tariffs will be addressed.
In an increasingly tense trade environment, the stakes have never been higher for either leader. Under Carney’s leadership, Canada’s Liberal Party has been in the political doghouse and in these trade disputes. His historic meeting with Trump presents an enormous opportunity to cut a mutually beneficial deal between both countries. Because of this, their conversations might just be the most important. This would be a big win—not just for Canada and the U.S., but for their respective economies and industries.
Carney and Trump are scheduled to meet soon. With increasing pressure from both domestic and international audiences, they will find ways to meet in the middle on these issues. The global economic environment is ever evolving. To maintain their robust trading ties, both countries need to address these tariff barriers promptly.
