Within the business and trade specialist circles, there’s an increasing belief that U.S. President Donald Trump might not eliminate all the duties he’s imposed on Canadian merchandise. As the United States and Canada engage in comprehensive trade dialogues, Ottawa remains steadfast in its public commitment to have all tariffs lifted; nonetheless, they are adapting to the reality of the situation. Commercial leaders and industry spokespeople, having discussed matters with the Canadian negotiation team, reveal they’ve been questioned about the tariff degree with which they can coexist.
Ongoing negotiations between Canada and the U.S., which intensified after a G7 summit assembly between Mr. Trump and the Canadian Prime Minister Mark Carney, remain closely guarded. A business leader, who has been in dialogue with the Canadian delegation, compared Mr. Carney’s negotiating style to that employed by investment bankers during mergers and acquisitions, with only a select group having access to the terms and absolute confidentiality being critical.
As the self-imposed deadline of July 21 rapidly approaches, a shared opinion surfaces among both business entities and trade specialists; irrespective of Canada’s offerings, Mr. Trump may not withdraw all recently imposed tariffs on Canadian commodities. As Goldy Hyder, the CEO and president of the Business Council of Canada, posits, free trade is not free any more. There are now associated costs, such as tariffs.
Over recent months, there has been a gradual easing in Mr. Trump’s international trade conflict. He temporarily held off tariffs on more than 50 countries (with the exception of Canada and Mexico) for a trimester, generating significant tariff exceptions for some Mexican and Canadian commodities. Presently, numerous countries are in trade discussions with the U.S. to obtain more extended exemptions as another tariff expiration soon approaches.
However, the President maintains a dedication to retaining tariffs to some extent, viewing them as tools to coerce non-trade concessions from other nations (like increased defense or border security spending) along with generating tax revenue and inviting foreign manufacturers to set up facilities in the U.S.
Additional tariffs are in the offing, as the U.S. has initiated investigations into lumber, copper, semiconductors, and pharmaceuticals under the Trade Expansion Act. This could lead to sector-specific tariffs, akin to those levied on steel, aluminum, and automobiles.
For many onlookers, a more practical upcoming resolution could consist of a partial diminution of the existing tariffs and applying quotas that would permit specific quantities of steel, aluminum, and cars into the U.S. either duty-free or at a reduced tariff rate.
Such an arrangement would echo the one agreed upon by British Prime Minister Keir Starmer and the Trump administration the previous month, which decreased tariffs on certain industry sectors and instituted quotas for cars and beef, whilst maintaining a standard 10% tariff.
Reports suggest that U.S. representatives show a discernible inclination toward a quota system, which could fluctuate from industry to industry.
Mr. Trump’s tariffs are seen as a violation of obligations under the United States-Mexico-Canada Agreement, a free-trade deal that Mr. Trump personally negotiated during his inaugural tenure. Agreeing to maintain certain tariffs could obstruct future agreement renewal discussions, slated for 2026.
Canadian Prime Minister Mark Carney has stated that Canada is prepared to apply new countermeasures against the U.S. on steel and aluminum if a mutually satisfactory trade deal isn’t finalized by the end of the 30-day period that concludes on July 21.
One pressing issue that may not wait is the Canadian Digital Services Tax, an initiative that would allow Ottawa to collect billions in tax revenue from U.S. internet companies. This comes into effect in the coming week.
In the view of an academic expert, Canada’s current strategic navigation across these issues is commendable. However, the expert points out that Mr. Carney and his team are essentially on the defensive in a game they don’t fully control.
Drawing an analogy, it’s akin to the classic cat-and-mouse game. There the cat decides whether the mouse has had enough chase and if it should release it, or decide to end the game entirely.