Little evidence to suggest a U.S. trade deal can be reached without tariffs: Carney

OTTAWA — A trade deal with the United States will likely include some tariffs, Prime Minister Mark Carney indicated on Tuesday ahead of a meeting with his cabinet.

Carney told reporters he expects the trade talks with the U.S. to “intensify” ahead of the Aug. 1 deadline to secure a new agreement, but then in French he said the evidence suggests President Donald Trump will not make any tariff-free deals.

“We need to recognize that the commercial landscape globally has changed. It’s changed in a fundamental manner,” Carney said.

“We will continue to focus on what we can most control, which is building a strong Canadian economy, and that’s part of what we’ll be discussing in cabinet today.”

Carney singled out work to make “stronger” auto, aluminum and copper sectors — all industries specifically targeted by American tariffs.

Carney scheduled the cabinet meeting last week after Trump sent a letter laying out his plan to levy 35 per cent tariffs on Canada on Aug. 1. It was held virtually.

Industry Minister Melanie Joly, who was in Halifax giving a speech, told reporters following the meeting that cabinet had “good and thorough” conversations on Canada-U.S. relations following the cabinet meeting at a press conference in Halifax.

“The goal is to ensure at the end of the day that we are protecting Canadian workers and we are making sure that Canada and Canadian’s interest are protected,” Joly said.

Joly did not take questions from reporters before she entered another meeting.

The prime minister is also set to meet with Canada’s premiers next week.

Jean Simard, CEO of the Aluminum Association of Canada, said in an interview with The Canadian Press that it seems “more and more evident” that countries will have to pay some sort of tariff to deal with the U.S.

“I think the hope for Canada is because we have a very strong and well-established agreement with the U.S. called the USMCA, that at the end of the day USMCA compliance access will remain,” Simard said in reference to the Canada-U.S.-Mexico Agreement on trade.

Trump outlined his 35 per cent tariff plan to Carney in a letter sent on July 10. A White House official later said that new tariff won’t apply to goods that are compliant with the Canada-U.S.-Mexico Agreement on trade. Canada typically refers to that agreement as CUSMA, while the U.S. tends to call it the USMCA.

That same official added that formal paperwork had not been produced to establish the new tariff level and Trump had not yet made a final decision about how it would be applied and things could still change. About 38 per cent of Canada’s exports to the U.S. claimed preferential treatment under CUSMA, though the number that could apply for the exemption is much higher.

Canada has yet to respond formally to the latest threat, or to Trump’s recent moves to impose lofty tariffs on copper imports and double existing levies on steel and aluminum.

Carney and Trump agreed last month to work toward a new trade and security pact by July 21, but the U.S. president unilaterally pushed back the timeline to secure a deal. Carney has said he would wait until the deadline before adjusting Canada’s counter tariffs on U.S. goods, based on where the U.S. tariffs were at then.

Simard said the industry needs to see more short-term support “very soon”.

“Markets have already reacted to a 50 per cent tariff on aluminum. It’s not good. It’s very destructive. It is very bad for the U.S. aluminum downstream industry and it’s not good for us,” Simard said.

Canada is the largest supplier of steel and aluminum to the U.S. The metals sector has seen job losses and decreased orders since Trump imposed tariffs.

Trade deals the U.S. has announced since Trump returned to office all include some level of tariff. The trade deal with the U.K. includes a 10 per cent tariff on most goods, while the deal with Vietnam includes a 20 per cent tariff on Vietnamese goods and a 40 per cent levy on goods being shipped through the South Asian nation.

Before boarding Marine One to head to Pennsylvania Tuesday afternoon, Trump said that a new trade deal with Indonesia will include 19 per cent tariffs, and no levy for the U.S.

“They are going to pay 19 per cent and we are going to pay nothing,” he said. “I think it’s a good deal for both parties.”

Trump said a few more deals will be announced.

“India basically is working along that same line — we are going to have access to India,” Trump said.

Trump said Monday that he saw the letters he sent to Canada, the European Union and Mexico about increased tariffs rates as “the deals.”

“I watched a show this morning and they were talking about, ‘Well when’s he going to make the deal?’ The deals are already made. The letters are the deals. The deals are made. There are no deals to make,” Trump said during an Oval Office meeting with NATO Secretary-General Mark Rutte.

Trump repeated Tuesday that he saw his letter to the European Union threatening 30 per cent tariffs as the deal, but added the two sides are still in talks.

The Trump administration may begin to face increased domestic pressure because of rising costs on consumer goods because of the global tariff campaign.

U.S. inflation rose to its highest level since February as Trump’s sweeping tariffs push up the cost of a range of goods including furniture, clothing and large appliances.

American consumer prices rose 2.7 per cent in June from a year earlier, the Labor Department said Tuesday, up from an annual increase of 2.4 per cent in May. On a monthly basis, prices climbed 0.3 per cent from May to June, after rising just 0.1 per cent the previous month

In Canada the annual pace of inflation accelerated to 1.9 per cent in June as consumers were paying more at car dealerships, Statistics Canada said Tuesday.

The June price hike is up from 1.7 per cent in May and was largely in line with economists’ expectations

-With files from Keith Doucette in Halifax, Craig Lord in Ottawa and The Associated Press

This report by The Canadian Press was first published July 15, 2025.

David Baxter, The Canadian Press