US Trade Rep Says Canada Tariffs Are Staying in Place

US Trade Representative Jamieson Greer has confirmed that tariffs on Canadian and Mexican goods will remain in place despite the continental trade pact known as CUSMA, signalling that Canadian exporters can expect no near-term relief from the levies imposed by the Trump administration on steel, aluminum, automobiles and softwood lumber. Greer's comments, delivered to reporters on Tuesday, came as Prime Minister Mark Carney was preparing for a major investor speech at the Economic Club of New York and arrived alongside the announcement of a landmark Canada-Germany liquefied natural gas deal.

What the trade representative said

Speaking to reporters in Washington, Greer said the US sense was that Canada was in a different position than other US trading partners and that Washington had what he described as continuing trade challenges with Ottawa. Greer said he speaks regularly with Canadian counterparts but noted that the structural disagreements between the two governments had not narrowed.

Greer also indicated that there was no near-term plan to remove sector-specific tariffs that have been imposed on Canadian exports over the past year. The current tariff structure includes targeted levies on Canadian steel and aluminum, on automotive parts and finished vehicles, and on softwood lumber. Goods compliant with CUSMA rules of origin have been largely exempted from the global ten per cent tariff imposed by the Trump administration on most other US imports.

The continental trade pact has therefore largely shielded Canada and Mexico from the broadest tariff measures, but the sectoral tariffs on Canadian exports remain significant. Trade in energy, critical minerals and fertilisers between the United States and Canada has continued without tariffs because both governments view those sectors as common areas of economic benefit.

The Canadian response

Canadian officials have continued to push for the removal of the sectoral tariffs, arguing that they violate the spirit of CUSMA and damage integrated North American supply chains. The Carney government has imposed retaliatory tariffs on a defined list of American goods, designed to apply political pressure on US states with significant export exposure to Canada.

Federal Trade Minister Maninder Sidhu has been leading the negotiation track on tariffs, with regular engagement at the deputy minister and ministerial levels. The Canadian Embassy in Washington has continued to coordinate broader US engagement, including with Republican members of Congress in states heavily reliant on bilateral trade.

Carney has framed the trade pressure as a structural challenge that requires Canada to diversify exports rather than rely solely on tariff negotiation. The Germany LNG deal announced this week is being held up by federal officials as evidence of that strategy beginning to deliver results, although the bulk of Canadian merchandise exports continues to flow to the United States.

What the tariffs cover

The Trump administration's tariff structure on Canada has evolved over the past year, but the current package targets sectors with significant Canadian export exposure. Steel and aluminum tariffs have been a particular concern for Canadian producers in Ontario and Quebec, with several facilities reducing output and consolidating operations to manage the impact.

The automotive sector has been hit harder. Tariffs on Canadian-built vehicles and on parts crossing the border multiple times during production have disrupted long-established cross-border supply chains. The federal government has implemented support programmes for affected Canadian workers and has pressured automakers to maintain Canadian production commitments.

Softwood lumber tariffs have hit British Columbia, Quebec and Atlantic Canada particularly hard. The softwood lumber dispute has been a recurring feature of Canada-US trade relations across multiple decades, and the current round of duties continues a pattern that long predates the Trump administration.

What it means for Canadians

For Canadian workers and businesses in affected sectors, the continuation of tariffs means continuing pressure on jobs, investment and revenue. Statistics Canada employment data have shown softness in tariff-exposed industries through 2025 and into 2026, although broader employment growth has continued elsewhere in the economy.

For Canadian consumers, the trade dispute has had a mixed effect. Some imported US goods have become more expensive due to Canadian retaliatory tariffs, and some Canadian-produced goods have seen price changes due to supply chain disruption. The Bank of Canada has continued to monitor the inflationary impact of the trade dispute, with the April 2026 inflation reading of 2.8 per cent reflecting in part the energy price effects of the war between the United States, Israel and Iran rather than tariff effects alone.

The broader macro impact has been to slow Canadian GDP growth, with Statistics Canada's preliminary estimate showing flat growth in March 2026. Bank of Canada economists have continued to flag trade policy uncertainty as a downside risk to the outlook, and the bank's April rate decision held the policy rate at 2.25 per cent in part because of those uncertainties.

The diversification strategy

The Carney government's response to tariff pressure has been to accelerate efforts to diversify Canadian exports away from the United States. The Germany LNG deal announced this week is the most visible expression of that strategy. Federal officials have also pointed to expanded trade engagement with the European Union, Japan, the United Kingdom and Indo-Pacific economies as evidence of broader diversification.

The challenge is scale. Statistics Canada data show that more than three-quarters of Canadian merchandise exports continue to flow to the United States, a structural dependency that cannot be unwound quickly. Diversification efforts that succeed in opening new markets typically take years to produce meaningful export volumes.

Federal officials have also emphasised the One Canadian Economy framework, designed to reduce internal trade barriers between Canadian provinces and territories. The framework is intended to support domestic productivity and resilience even as external trade relationships remain volatile.

Provincial reactions

Provincial governments have reacted to Greer's comments along familiar lines. Ontario Premier Doug Ford, who has positioned himself as a leading voice on the tariff file, called on Ottawa to deliver more aggressive retaliation against US exports and to provide more support for Ontario workers in affected industries.

Quebec Premier Christine Fréchette has continued to focus on supporting Quebec's aerospace and forestry sectors, which have been particularly affected by the trade pressure. British Columbia Premier David Eby has focused on the lumber and forestry sectors and has called for federal-provincial coordination on supports for affected communities.

The premiers will continue to discuss trade policy at the upcoming Council of the Federation summer meeting, where the response to US tariffs is expected to feature prominently alongside the broader debate about Alberta's separation referendum and the country's economic resilience.

The political picture in Washington

The Trump administration's tariff strategy has continued to evolve through ongoing negotiations with countries around the world. The administration has reached preliminary agreements with several major US trading partners over the past year, although the durability of those agreements has been uncertain.

Republican members of Congress in states heavily dependent on trade with Canada have continued to express concerns about the impact of tariffs on local industries. However, the Trump administration has shown limited willingness to roll back tariffs based on congressional concerns, and the broader trade strategy has remained firmly under White House control.

Democratic members of Congress have generally been critical of the tariff strategy but have not formed a unified front in opposition. The political environment in Washington has continued to be shaped by the broader Trump administration agenda, including domestic policy priorities and foreign policy decisions across multiple regions.

What's next

The Carney government is expected to continue both diversification efforts and direct engagement with the Trump administration on tariff issues. Federal officials have signalled that additional trade announcements may be made in coming weeks as part of the broader diversification strategy, with European, Asian and Latin American negotiations all reportedly progressing.

The Bank of Canada's next rate decision on June 10 will be closely watched for any indication of how the central bank is interpreting the trade environment. Most market participants expect the bank to hold the policy rate steady, although the broader outlook for the rest of 2026 remains uncertain.

For Canadian exporters, the message from Washington this week is that the tariff environment is here to stay. The work of adapting to that reality, including through diversification, productivity improvements and continued political advocacy, will continue through the rest of the year and beyond.