With Canada no longer able to rely on US, Carney pushes new markets

By Ian Austen

Days after Canada was hit by increased tariffs from President Donald Trump, Prime Minister Mark Carney of Canada downplayed talk of trade retaliation on Tuesday, saying he’s focusing on Canada reducing its economic ties to the United States.

“We cannot count or fully rely on what has been our most valued trading relationship for our prosperity,” Carney told reporters at a lumber mill in West Kelowna, British Columbia. “That’s why we’re increasingly focused on building our strength at home and finding new opportunities for Canadian companies and workers abroad.”

Carney said that he had not spoken with Trump since the American president raised broad tariffs against Canada to 35% from 25% on Thursday and trade negotiations between the two countries collapsed. Trump indicated at the time that Carney had unsuccessfully tried to set up a call.

“We’ll speak when it makes sense,” Carney said.

Trump denied Canada an extension on trade talks, in contrast with his approach to Mexico. Trump suspended new tariffs against Mexico for 90 days after speaking last week with its president, Claudia Sheinbaum.

The effect of the increased tariff on Canada was mitigated by the president excluding products that qualify as North American under the trade agreement Trump made with Canada and Mexico during his first term. Carney said that about 85% of trade between the two countries remains tariff free.

But a 25% tariff on autos assembled in Canada, which is adjusted to refect the level of American parts in specific vehicles, as well as 50% tariffs on steel and aluminum, are already being felt by those industries.

Algoma Steel, the only Canadian-owned steel producer, has begun layoffs it attributed to tariffs, and General Motors of Canada cut one of the three shifts at its pickup truck plant in Oshawa, Ontario. citing “the evolving trade environment.”

Trump has announced plans to extend those tariffs to other products, including copper and pharmaceutical exports from Canada.

Canada has historically been the largest buyer of American exports. Carney said Tuesday that despite its relatively small population, the country is also the second largest source of foreign investment in the United States.

In April, Carney did retaliate with tariffs against American products, including a 25% duty on certain autos. (Companies such as Honda, Toyota and General Motors that also build cars in Canada are excluded from the measure.)

But several Canadian industries have complained that they are being harmed by those measures, particularly the duties on U.S.-made steel, which has led the government to introduce a variety of exemptions.

Many Canadians, angered and outraged by the president’s trade actions, have called for further trade retaliation.

But Carney’s comments on Tuesday suggested that Canadians should temper expectations for any immediate response.

“We have always said that we will apply tariffs where they had the maximum impact in the United States and a minimum impact in Canada,” he told the news conference “So we don’t automatically adjust.”

He added: “We look at what we can do for our industry that’s most effective. In some cases, that will be to remove tariffs.”

Carney was at the lumber mill in West Kelowna to unveil the next step in his plan to deal with American tariffs. While he linked lumber to Trump’s recent trade measures, the tariffs on lumber currently faced by Canadian mills are not new: They were already in place when Trump took office for this second term.

He said that the government will make 700 million Canadian dollars, about $508 million, in loan guarantees available to Canadian lumber companies and provide CA$500 million to assist those companies in developing new products and markets.

For decades, some U.S. lumber producers have brought trade complaints against Canada, arguing that its lumber — which is mostly cut on government land — is being sold below its actual cost in the United States. For the most part, international trade tribunals have found the U.S. lumber tariffs to not be valid.

Two weeks ago, Carney announced a variety of measures to support the steel industry. In addition to financial assistance, they included quotas on imports of steel from other countries.