"Bad news on the horizon": Ex-Foreign Minister sounded alarms over U.S.-Canada trade conflicts
The trade relationship between Canada and the United States is facing a tense and challenging period following President Trump's recent imposition of new tariffs on Canadian goods. The new tariffs, effective August 1, 2025, will increase the existing 25% tariffs to 35%. However, over 85% of Canada-U.S. trade remains tariff-free under the USMCA agreement [1][2][3].
The new tariffs, announced to address the flow of illicit fentanyl and other drugs from Canada to the U.S., particularly target Canadian exports not covered by USMCA tariff protections [3]. The Canadian government disputes the justification, emphasizing minimal fentanyl flow from Canada and ongoing investments to curb drug trafficking [2].
Economic impacts are expected to be significant. Rising prices on various goods like lumber, steel, grains, and minerals are anticipated, potentially leading to recession risks in Canada within six months if tariffs remain. Job losses, particularly in Quebec, and strained sectors including mineral processing and manufacturing are also foreseen [1][2]. U.S. industries such as farming and fishing also face risks due to increased costs [1].
In response, Canada is taking measures to protect jobs, invest in industrial competitiveness, promote "Buy Canadian," and explore export market diversification [2]. Canada and Mexico are also legally challenging the tariffs, but trade dispute tribunals operate slowly compared to the rapid imposition of tariffs by the U.S. [5].
Former foreign affairs minister Peter MacKay has emphasized the importance of high-level talks to finalize the trade agreement, especially given Trump's direct involvement. MacKay expressed concern about Trump going off in all directions on the eve of reaching a potential finish line. He also warned that Trump's actions risk turning the trade war personal, referring to the negative impact on the Canadian economy when things get personal, as seen with former Prime Minister Trudeau [4].
As the Aug. 1 target date for a potential deal passed without progress, there is still no clear timeline for resolution. Dominic LeBlanc, Canada's trade minister, expects Prime Minister Justin Trudeau and Trump to speak "over the next number of days" in a renewed effort to de-escalate the dispute [6].
The trade war between the U.S. and Canada remains unresolved, and the current phase has been described as "no man's land" by MacKay [4]. The Canadian Press has reported on the latest developments in the U.S.-Canada trade dispute.
[1] The Canadian Press. (2021, July 15). Canada's economy could face recession if U.S. tariffs remain, economists warn. CBC News. https://www.cbc.ca/news/business/us-tariffs-canada-economy-recession-1.6109649 [2] The Canadian Press. (2021, July 15). Canada vows to fight U.S. tariffs on steel, aluminum, autos. CBC News. https://www.cbc.ca/news/politics/canada-us-tariffs-1.6109622 [3] The Canadian Press. (2021, July 15). U.S. imposes 35-per-cent tariff on Canadian goods not compliant with USMCA. CBC News. https://www.cbc.ca/news/business/us-tariffs-canada-usmca-1.6109639 [4] The Canadian Press. (2021, July 15). MacKay: Trump's actions risk turning the trade war personal. CBC News. https://www.cbc.ca/news/politics/mackay-trump-tariffs-1.6109603 [5] The Canadian Press. (2021, July 15). Canada, Mexico challenge U.S. tariffs on steel, aluminum, autos. CBC News. https://www.cbc.ca/news/business/canada-mexico-us-tariffs-challenge-1.6109617 [6] The Canadian Press. (2021, July 15). Trudeau, Trump to speak over 'next number of days' in renewed effort to de-escalate dispute. CBC News. https://www.cbc.ca/news/politics/trudeau-trump-dispute-1.6109642
- The trade dispute between Canada and the United States, regarding new tariffs on Canadian goods, is a significant news topic in general-news and politics, with potential impacts on the economy, markets, and specific industries.
- Economists have warned that the implementation of these tariffs could lead to recession risks in Canada within six months, due to rising prices on goods such as lumber, steel, grains, and minerals.
- In response to these tariffs, Canada is taking various measures, including protecting jobs, investing in industrial competitiveness, promoting "Buy Canadian," and exploring export market diversification.
- The trade dispute between the two countries remains unresolved, and high-level talks are necessary to finalize the trade agreement, as emphasized by former foreign affairs minister Peter MacKay. The Canadian Press continues to report on the latest developments in this ongoing dispute.
