Donald Trump’s recent trade agreement with the United Kingdom signals potential ramifications for Canada as discussions around trade continue to unfold. The U.S. President has made it abundantly obvious that he considers any such Canadian levy on digital services as “extraterritorial” and therefore an attack on American companies. That makes for some contentious negotiations to come. Trump’s prior economics disasters include imposing economywide tariffs on Canada. These policy moves wildly increased tensions between the two estranged neighbors.
In March, Trump even linked these tariffs with the surge of fentanyl pouring over the U.S.-Canada border. He imposed these actions as necessary to promote U.S. national security. The President’s aggressive strategy has not only impacted Canada but extended to global markets, with significant tariffs imposed on China and other nations. Specifically, it was Trump who slapped a hefty 145 percent tariff on imports from China. He further imposed 25 percent tariffs on steel, aluminum, and automobiles.
In April, Trump started what he claimed would be a “trade war.” President Trump did the same thing, imposing “reciprocal” tariffs, but then promptly backpedaled on the worst of the punitive tariffs—backpedaled within hours. The cumulative effect of these tariffs has been widely felt. As a partial concession, his administration trimmed proposed duties on imports that meet the Canada-U.S.-Mexico Agreement (CUSMA). This additional move underscores his confounding strategy with respect to trade relations.
And yet Trump is dead certain that trade deficits don’t matter. This conviction is the undercurrent of his administration’s trade policy. His recent tête-à-tête with Bank of England Governor Mark Carney was quite chummy. This followed earlier jibes directed at Canada and its Prime Minister, Justin Trudeau. This suggests a new willingness to be more diplomatic and consultative as the U.S. re-calibrates its own approach to trade.
Trump’s trade adviser Peter Navarro confirmed that the U.K.’s digital services tax remains “still in negotiations,” reflecting ongoing discussions over international taxation policy. The President nevertheless blustered that this new deal with the U.K. will increase American ethanol and beef exports. He highlighted the need to reassert U.S. agricultural interests on the international stage.
The deal will see a 90-day hiatus where countries can negotiate agreements, while keeping in place a 10 percent of universal tariff. Trump told reporters in the Oval Office that “the final details are being written up,” indicating active engagement in shaping trade outcomes.
U.S. Commerce Secretary Howard Lutnick unequivocally reiterated that baseline tariffs on the vast majority of U.K. imports will remain in place. This decision further cements the administration’s fierce dedication to aggressive, protective trade actions. This approach sends a signal to Canada and others about the administration’s objectives to reshape global trade through tariffs.
Trump’s preliminary trade agreement with the U.K. may suggest that while he is willing to exert pressure on allies like Canada, he is not entirely opposed to cooperation on international trade. This thoughtful position opens the door to interesting questions. How ambitious (or reckless) is Trump prepared to be in redefining the global trading system?
As those negotiations continued, political theorist Henry Olsen observed that this potpourri of an agreement would put Canadian leadership to the test in these choppy waters.
“That will be extremely difficult for Prime Minister Carney to do.” – Henry Olsen
