Mark Carney, the new lender of last resort, which last we checked was the highly popular U.K. They held a robust conversation about the competitive and complicated trade relationship between their two countries. The meeting comes on the heels of unprecedented economic tensions. These tensions were results of the retaliatory tariffs that the Trump administration had forced on Canadian products. Carney was clearly excited by the chance to talk directly with Trump, but made clear that keeping a direct, cooperative line of communication open would be crucial.
In 2022, total trade between Canada and the United States was worth more than $760 billion. This remarkable number only underscores Canada’s importance as the United States’ second-largest trading partner, after Mexico. This relationship has been further complicated by Trump’s previous assertions about making Canada America’s “51st state.” The purpose of the working meeting was to address these challenging issues directly. In particular, it focused on the punitive tariffs that have poisoned our bilateral relationship.
Tariffs and Trade Deficits
At that meeting, Trump focused on the trade deficit the U.S. runs with Canada. He identified American imports of Canadian oil as the key culprit behind this problem. He’s the one who originally implemented a 25 percent tariff on steel and aluminum imports. He further specified an additional 25 percent tariff on cars that weren’t made according to the North American Free Trade Agreement (NAFTA) guidelines. This very aggressive trade policy has taken a huge toll on Canadian exports. In fact, export trade with the U.S. was severely impacted, sending exports crashing down by $3.7 billion last year.
Carney’s election victory on April 28 was largely built upon promises to address these issues head-on, aiming to forge a new bilateral economic and security relationship with the U.S. He firmly stated, “Canada is not for sale, it won’t be for sale — ever,” reinforcing his position against any perceived encroachments on Canadian sovereignty.
Economic Implications
The economic impact of the current trade talks is tremendous. Canada is the biggest export market for U.S. goods combined, supporting over 4 million American jobs and injecting billions into the U.S. economy. In 2024, Canada reported a merchandise trade surplus of $102.3 billion (approximately $114.4 billion), indicating its critical role in North American trade dynamics.
With the recent imposition of tariffs, Canadian business and policy makers are concerned. Exports have braked hard, with the largest drop since the record series began. This decline has many asking whether the tariffs will take a long-term toll on future economic development and job security in Canada and the U.S.
Ahead of the meeting, Trump began to weigh in on social media. He announced, “We don’t want their cars, we don’t want their energy, we don’t want their lumber, we don’t want any of their crap.” His remarks reflect a pervasive and concerning sentiment at the highest levels of the U.S. administration. They view Canada as a bit of a dependent, not an equal and true partner. Despite these assertions, Carney has emphasized that Canada is committed to maintaining a strong relationship with its neighbor to the south.
Moving Forward
Carney and Trump
To be sure, Carney and Trump are having some very essential discussions. These negotiations might settle some of the most important bilateral skeletons in their countries’ closets. Trump’s plan to make a love connection with Canada. At the same time, he criticized the trade financial benefits Canada appears to enjoy at America’s expense.
We’re not going to be talking about that except if someone wants to talk about it,” Trump said during their meeting. This sentiment is representative of the continued challenges in the negotiation process with both parties trying to find the sweet spot between their interests.
