Canada remains hopeful leaders can come to an agreement to end trade chaos
Tensions in the Canada-US trade relationship remain high as a new, higher tariff on Canadian goods takes effect. The move by the US government, which cites Canada’s alleged failure to curb fentanyl smuggling, has prompted a response from Canadian officials who expressed disappointment but pledged to continue working toward a deal.
Dominic LeBlanc, the federal cabinet minister responsible for Canada-US trade, stated on Sunday he expects prime minister Mark Carney and US president Donald Trump to speak “over the next number of days,” Reuters reported.
The announcement came during an interview on the CBS program, “Face the Nation,” after US officials increased tariffs on Canadian goods from 25% to 35% on Friday. The tariffs apply to goods not covered by the US-Mexico-Canada Agreement.
Economic resilience in a time of tariffs
The new tariff comes on top of existing duties on a number of Canadian exports, including steel, aluminum, and automobiles. However, economists are noting a degree of stubbornness in the Canadian economy, which so far has avoided a collapse despite the trade disruptions.
According to economists like TD Bank’s Marc Ercolao, the economy’s ability to withstand the tariffs has been a “bit of a surprise.” Ercolao told CBC that the gradual imposition of tariffs has given businesses time to adapt, mitigating some of the most severe potential impacts. While export-heavy sectors such as manufacturing and transportation have been hit hard, services have shown more stability.
The fentanyl disagreement
A key point of contention is the flow of fentanyl into the United States. The White House has linked the increased tariffs to what it claims is Canada’s failure to address the issue.
LeBlanc acknowledged the US concerns about the drug but asserted that Canada is a small contributor. In a statement released Friday, Carney said, “Canada accounts for only 1% of US fentanyl imports and has been working intensively to further reduce these volumes.”
LeBlanc’s remarks on Sunday indicated a willingness to find a solution. He told “Face the Nation” host Margaret Brennan, “We believe there’s a great deal of common ground between the United States and Canada in terms of building two strong economies that work well together.” LeBlanc described his recent discussions with US Trade Representative Jamieson Greer and Commerce secretary Howard Lutnick as “constructive, cordial conversations.”
The path forward
LeBlanc expressed optimism that a deal could still be reached. “We think there is an option of striking a deal that will bring down some of these tariffs provide greater certainty to investment,” he said.
The Bank of Canada’s most recent monetary policy report outlined a scenario where Canada avoids a recession even with the current tariff situation. However, the report also warned that growth would be on a “permanently lower path” because tariffs make the economy “work less efficiently.”
The trade minister told Brennan he expected a conversation between Carney and Trump in the coming days, noting that Carney “has built a very business-like, respectful relationship with president Trump.” LeBlanc also noted the US-Canada relationship is unlike others, stating, “We don’t sell things to each other as much as we build things together.”
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