Carney and Trump Intensify Trade Talks as Canada Weighs “Dollar-for-Dollar” Response

Canada and the United States have entered a critical new phase in their trade dispute, after Prime Minister Mark Carney and U.S. President Donald Trump agreed to intensify negotiations aimed at preventing another round of steep American tariffs on Canadian goods.

Following a phone call with Trump on Tuesday, Carney said the two leaders had agreed to accelerate discussions and begin addressing unresolved trade issues immediately. He also made clear that Ottawa continues to consider all available options should Washington proceed with its planned measures.

The White House announced that an additional 50 per cent tariff would be imposed on selected Canadian products beginning August 19, giving the two countries approximately 30 days to negotiate a possible settlement.

The proposed measures would affect an estimated US$20 billion worth of Canadian exports annually, representing about 5.2 per cent of Canada’s merchandise shipments to the United States.

Products expected to be affected include alcoholic beverages, cement, hockey sticks, honey and a range of food and industrial goods. Major sectors such as energy, potash, fish and critical minerals were reportedly excluded from the latest measures.

The Trump administration has accused Canada of discriminating against American automobiles, dairy products and alcoholic beverages. Washington invoked Section 338 of the U.S. Tariff Act of 1930, a rarely used provision allowing the president to impose duties of up to 50 per cent on goods from countries deemed to discriminate against American commerce.

Carney described the announcement as another unilateral trade action that conflicts with the Canada–United States–Mexico Agreement, known in Canada as CUSMA.

He said Canada had already submitted detailed proposals aimed at resolving the disputes and modernizing the continental trade relationship, adding that Ottawa was prepared to enter intensive negotiations over the coming weeks.

The Canadian response, however, has not been limited to calls for dialogue.

Ontario Premier Doug Ford urged the federal government to retaliate against any new U.S. tariffs on an equal basis, calling for a response of “tariff for tariff, dollar for dollar.”

A dollar-for-dollar strategy would involve Canada selecting U.S. imports with a total value roughly equal to that of the Canadian exports targeted by Washington, and then imposing matching counter-tariffs.

Ottawa has used a similar approach before. In March 2025, Canada imposed 25 per cent tariffs on $29.8 billion worth of American products in response to U.S. duties on Canadian steel and aluminum.

Carney has not formally adopted Ford’s proposal, but he said his government would take whatever steps were necessary to protect Canadian workers, farmers, businesses and families. A proportional retaliation package therefore remains an option rather than a confirmed federal decision.

The prime minister also held a virtual meeting with provincial and territorial leaders to discuss the American measures and coordinate Canada’s response.

The leaders examined possible support for affected industries, efforts to strengthen the domestic economy and plans to expand Canadian energy and infrastructure capacity in case the trade dispute becomes prolonged.

Canada’s premiers are expected to meet again in person in Charlottetown on July 23.

Most provinces have also resisted calls to lift restrictions on the sale of American alcoholic beverages before a broader trade settlement is reached. Those restrictions have become a central point of contention, with the Trump administration calling them discriminatory and provincial governments describing them as a response to earlier U.S. tariff threats.

Economists warn that the new duties could raise costs on both sides of the border and disrupt companies that depend on deeply integrated North American supply chains.

Chemical manufacturers, electronics companies, consumer-goods producers and small businesses may be especially vulnerable, as many lack the financial capacity to absorb tariffs as high as 50 per cent.

Despite the heightened rhetoric, the 30-day delay before the tariffs take effect suggests that Washington is still leaving room for negotiations.

The coming weeks will determine whether the accelerated talks produce a compromise or push Canada’s largest trading relationship into another costly cycle of tariffs and retaliation.