Despite Mark Carney’s ‘tough on Trump’ election win, Canada can’t afford to go without US trade deal
Despite Mark Carney’s ‘tough on Trump’ election win, Canada can’t afford to hold out as the only G7 country without a trade deal with America, say leading audit, tax and business advisory firm, Blick Rothenberg.
Melissa Thomas, a director at the firm, said: “Canadian prime minister, Mark Carney was elected on a ‘tough on Trump’ stance. However, tariffs have battered the Canadian economy, and valuable agreements that have sheltered the countries exporters and importers are on the line. Canada can’t economically afford to remain the only G7 country without a trade deal with America in 2025.”
She added: “Today’s meeting in Washington is likely table dressing for future negotiations, particularly to ensure CUSMA (the Canada/US/Mexico Free Trade Agreement) is renewed. It allows certain goods from Canada to come to the US duty free if they are compliant, which has offered some shelter from tariffs for key Canadian imports and exports. The agreement was signed, ratified and came into effect between the three nations in July 2020 and is up for its first review six years after entry-into-force so in July 2026.”
Melissa said: “The meeting between Donald Trump and Mark Carney could give an insight into how those future CUSMA negotiations will pan out. However, Donald Trump may look to not renew the tri-lateral agreement and use it as endless leverage between Canada and Mexico as they continue trade talks.”
She added: “This in itself offers an opportunity for Canada and Mexico to look to bypass the US and create their own bilateral trade agreement, but can they afford to alienate Mr Trump and the US in doing so? Mark Carney’s office has claimed this meeting between the two leaders to be a ‘preparation for the first joint review’ of CUSMA that is scheduled to be next year.”
Melissa said: “Previous tariffs imposed on cars, steel and aluminium have hit the Canadian economy hard with domestic Canadian unemployment topping a nine year high at 7.1%, and a half percentage point higher than at the start of the year.”
She added: “A recent survey by Abacus Data of 1,500 Canadian adults showed that Canadians are increasingly worried about the cost of living and the overarching state of their economy. They are looking for the Canadian government to start focusing more on what they can do to show tangible improvements to the daily lives of the Canadian people and move away from the rhetoric of Anti-Trump and the focus on him and his immediate team.”
Melissa said: “Since Mark Carney has come to office, he has ended the move to impose a Digital Services tax, a tax that Donald Trump was against, he has dropped most of the initial retaliatory tariffs that were imposed on US goods, increased spending and physical presence on the US/Canada border and has withdrawn the 20-year legal dispute over American duties on Canadian softwood lumber.”
She added: “However, the US has offered very little in return. The lumber issue which arose in 2016 and has since dragged on, is due to US claims that the Canadian stumpage fees (largely levied by the government as most of the land is publicly owned) are lower than market value, essentially putting Canadian lumber in an unfair advantageous position over US lumber, which is subject to higher stumpage fees given the US timber is more likely to be on privately owned land so the stumpage fees are subject to usual, competitive market conditions.”
Melissa said: “This is coupled with Donald Trump recently announcing that he’s increasing a 10% tariff (due to come in on 14 October 2025) on imported timber and lumber and a 25% duty on kitchen cabinets, bathroom vanities and upholstered furniture, making Canadian produced goods less attractive for US households as they may be looking at some renovations and remodelling over the US Thanksgiving period.”
She added: “On 1 January 2026, the duties are expected to increase to 30% for upholstered wooden products and 50% for kitchen cabinets and bathroom vanities imported from countries that fail to reach an agreement with the US.”
Melissa said: “Canada is the biggest softwood lumber supplier to the US, where Canadian exporters are already facing a combination of anti-dumping and anti-subsidy tariffs of around 35%.”