In a surprise move worthy of a WWE smack down, U.S. president Donald Trump announced that he is cancelling trade negotiations with Canada. He specifically called out the country’s “unfair policies” and an existing DST that he says targets American firms. This announcement comes just as the two governments were, according to reports, closing in on an agreement to calm a growing tariff trade. The stoppage of negotiations on the TPP has many worried about China’s economic ambitions and the course of US-China relations.
Mark Carney, former Governor of the Bank of Canada, and current chair of Council on Canada-U.S. The cohort engaged deeply with the intricacies of trade and corporate power. To Trump, Canada has been a “very difficult country to deal with over the years.” This release is a reminder of his long history of frustration on trade issues. He added that Ottawa is in a weaker position in negotiations than Washington. This serves to emphasize the significant inequity in the power dynamic in their negotiations.
Trump’s remarks further underscored his dissatisfaction with Canada’s dairy sector protections, which include high tariffs on imports of American milk and cheese. He cast these policies as discriminatory and harmful to American workers and businesses. He criticized Canada for moving forward with a DST of their own that has caused U.S. congressional leaders to lose their minds. They contend this action could encourage retaliation through similar discriminatory actions targeting U.S. companies.
Trump’s Strong Words on Trade Relations
Judging by his remarks, Trump spared no insult in expressing his opinion on Canada’s trade policy. He announced, “Canada has been a very difficult country to deal with over the years.” He underscored that the U.S. has considerable economic power over Canada. He said, “I don’t want to have to use it, but they really did something to our tech companies.”
The president’s frustration hit a peak today with a loud, clear message that he’s done negotiating indefinitely. So, we’re going to freeze all negotiations with Canada, effective immediately, until they get their, uh, you know what, together,” he declared. Trump just sent them a very big clue. He announced that Washington would notify the Canadians of new tariff rates required to do business with the United States in the next seven days.
Reactions from Canadian political leaders to Trump’s comments have been predictably mixed. Conservative Leader Pierre Poilievre registered his disapproval on the suspension of trade talks while calling for their speedy recommencement. He issued a reminder that Conservatives are always ready to make a good deal for Canada. He promised to put Canada first in everything, always.
Heather McPherson, another member of Parliament, opened a blistering attack on the government’s failure to manage Trump. She voiced her discontent with their approach. She added, “Clearly, appeasement doesn’t work. What works is standing up for Canadian jobs and communities.” This further underscored the need for Canada to adopt a harder line in negotiations.
The Digital Services Tax Controversy
Canada has implemented a three percent tax on revenue earned by foreign digital firms. This new move is precisely at the center of the current stormy billows. Critics argue that this digital services tax disproportionately affects American tech firms such as Amazon, Google, Meta, Uber, and Airbnb. Trump’s administration has repeatedly raised fears that such policies are unjust and threaten to provoke retaliatory actions.
Other U.S. lawmakers have called the DST a “discriminatory cash grab.” This would encourage other countries to act in kind. Goldy Hyder, President and CEO of the Business Council of Canada, presented some equally potent concepts. He argues that Canada should scrap the DST as a good faith measure now, in return for the US lifting the tariffs it has already raised.
Indeed, as Trump’s comments reveal, there is deepening concern over U.S. trade policy and its impact on U.S.-Canada relations. Beyond their high up-front financial impact, these policies will create a bad precedent. It’s estimated that American businesses could face costs approaching $2 billion due to Canada’s unlawful trade practices.
Future Prospects for Trade Negotiations
Despite the current impasse, both governments have expressed interest in reaching an agreement that could end Trump’s stop-and-go tariff war. That’s when everyone thought they’d have a deal done by mid-July. Trump’s abrupt announcement to cut the talks short has thrown much of the future economic partnership between the three countries into confusion.
All these time, trade relations have remained precarious. It may be that a Mark Carney’s private, aware negotiations could have surfaced key information that would allow both sides to maneuver safely through these choppy waters. Negotiations are at an impasse. Even less clear is how the two countries will address their divergences, and whether they will be able to find mutual benefit moving forward.
