Trade deal to leave ‘bad outcome’ for Canada and U.S., ex-minister says

Mark Carney is doing what no previous Canadian leader has done by accepting that President Donald Trump can impose tariffs despite the terms of the North American trade pact, the country’s former deputy prime minister said.

“Canada apparently will have lower tariffs on steel, aluminum, cars and car parts. But tariffs will be in place and Canada will accept the legitimacy of those tariffs. That’s a real Rubicon that it looks like will be crossed,” Chrystia Freeland said on Bloomberg Television’s Wall Street Week With David Westin, to which she is a regular contributor.

United States and Canadian negotiators are meeting in Washington on Friday, trying to cement a deal to ease trade tensions between the longtime allies. The stakes are high : the Trump administration is set to impose new 50 per cent tariffs on hundreds of products from Canada at 12:01 a.m. New York time on Saturday, unless there’s a deal or another delay from the White House.

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The countries are discussing an arrangement that would lower U.S. tariffs on imports of certain Canadian steel and aluminum items to 25 per cent from 50 per cent, and cut the headline duty on autos to 15 per cent, people familiar with the matter told Bloomberg News earlier this week. But the final agreement was not done as of Friday morning and the situation remains fluid.

In return, Canada would remove retaliatory measures such as its own counter-tariffs on U.S.-manufactured autos, the people said.

“The idea that tariffs on these sectors would be accepted by Canada, that is a really big deal,” said Freeland, who was deeply involved in the negotiations that led to the Canada-U.S.-Mexico-Agreement (CUSMA) during Trump’s first term. “That is a bad outcome for Canada to have permanent tariffs on our steel, aluminum, cars and car parts — really harmful for those sectors. But I think it’s a bad outcome for the United States as well.”

Canada has enjoyed decades of trade at near-zero tariffs with the U.S. The two countries exchanged $900 billion of goods and services last year, and Canada is the largest export market for many U.S. industries, including autos. Along with Mexico, the countries are part of CUSMA, which Trump called “the best agreement we’ve ever made” in 2020.