US Trade Rep Says Canada Tariffs Here to Stay as Talks Stall

United States Trade Representative Jamieson Greer told reporters on Monday that tariffs on Canada and Mexico will remain in place despite the existence of the Canada-United States-Mexico Agreement, signalling that the Trump administration is in no rush to wind down the levies that have squeezed Canadian steel, aluminum, and softwood producers for more than a year. Greer described Canada as being in a different spot from most other countries facing American tariffs, saying it is hard to see where the situation ends.

The comments confirmed what Canadian officials and exporters have suspected for months. Most other US trading partners, including major European economies and several Asian counterparts, have, in Greer's framing, begrudgingly accepted that tariffs are a permanent feature of the Trump administration's economic policy and have been willing to continue negotiating around them. Canada, the trade czar said, has taken a different approach, and the resulting standoff is now bleeding into other elements of the bilateral relationship.

What Greer said

Greer made the comments during a public appearance in Washington and reiterated them later in the day in an interview with US business media. He acknowledged that the continental trade pact has largely shielded compliant goods from the broad 10 per cent global tariff regime that Washington applies to most other countries. But he was clear that sector specific tariffs on steel, aluminum, and softwood lumber remain in place, and that the Trump administration considers Canada a national security concern in several files.

The trade representative also flagged that automobiles remain the most challenging single sector in the bilateral conversation. The integration of the North American auto industry across the Canada-US border means that any new tariff or rule of origin change has the potential to disrupt continental supply chains, but Greer said that the administration is not ready to make sweeping concessions on the file. Canadian and American negotiators have been in regular contact, but the public statements from senior administration officials have grown harder rather than more conciliatory.

What is and is not tariffed

The current trade environment is uneven. Goods that are compliant under the continental pact, including most manufactured products that meet the rules of origin, continue to flow across the border without the 10 per cent global tariff. Energy, critical minerals, and fertiliser have remained untouched by tariffs because they are seen as common economic ground between the two countries. The Trump administration has consistently described those sectors as essential to American economic security.

The sectors where tariffs bite are different. Canadian steel and aluminum have faced significant tariffs since the early days of the Trump administration's second term, with sector specific rates that exceed the broader 10 per cent global level. Softwood lumber, which has been a long term irritant in the bilateral relationship, is subject to its own legacy of duties and countervailing measures. The Trump administration has also signalled that other strategic sectors could become subject to new tariffs.

How Canada has responded

Prime Minister Mark Carney has framed his entire economic agenda around the need to reduce Canadian dependence on the United States. Since taking office, the Liberal government has pursued LNG diplomacy with Germany, a fast track major projects bill, a national electricity strategy aimed at building east-west grid links, and a series of trade outreach efforts to the European Union, Japan, and South Korea. The recent Canada-Germany LNG supply deal is part of that diversification.

Carney has also been clear that retaliatory tariffs remain on the table. Canada has already imposed counter tariffs on a list of American goods, and the government has indicated that further measures are possible if the trade situation deteriorates further. The challenge for Ottawa is to retaliate in a way that is meaningful enough to deter American escalation without producing more economic harm at home than the original tariffs did.

Industry impact

The impact on Canadian industry has been significant. Steel and aluminum producers in Ontario, Quebec, and British Columbia have reported reduced US sales, with some companies temporarily idling production lines or laying off workers. Softwood lumber producers in British Columbia and the Atlantic provinces have continued to fight the duties through trade panels, but the cumulative impact has been measurable in mill closures and reduced regional employment.

Automotive supply chains have so far been less affected by sector specific tariffs but face significant uncertainty about how rules of origin will evolve. Automakers with assembly plants in Ontario have been pressing both governments for clarity, and the lack of resolution is beginning to influence investment decisions for future model years. Several Canadian provinces have introduced programs to support affected workers, but federal officials have acknowledged that the assistance only partially offsets the losses.

The Permanent Joint Board suspension

The trade tensions are also bleeding into the defence relationship. The Trump administration earlier this spring put the Permanent Joint Board on Defence, a body that dates back to 1940, on hold. American officials said the suspension reflected concerns about Canada's pace toward NATO's defence spending targets and toward modernisation of the continental air defence system. The suspension has been treated by Ottawa as politically uncomfortable but not crippling.

Carney has played down the significance of the suspension and pointed to Canada's recent achievement of the 2 per cent of GDP NATO defence spending target as evidence that Ottawa is taking the commitment seriously. The Prime Minister has also been pursuing a defence partnership with Europe that aims to give Canada a degree of strategic optionality alongside the United States.

The provincial dimension

Premiers across the country have been vocal in pressing for federal action on the tariffs. Ontario Premier Doug Ford has tied the tariff fight closely to his broader political identity and has been one of the most consistent voices in calling for an aggressive Canadian response. Quebec Premier Christine Fréchette has been similarly vocal, particularly on aluminum where the province's smelters are among the largest in North America. British Columbia Premier David Eby has focused on softwood lumber, where coastal mill closures have been visible in local communities.

The first ministers have met repeatedly through the year with Carney to coordinate the federal provincial response, and the meetings have produced an unusual degree of unity. The economic stakes for each province are significant enough that even premiers who disagree with Carney on other files have been broadly supportive of the federal approach to the tariff fight. That unity has been a substantial political asset for the Prime Minister.

What it means for Canadians

For Canadian consumers, the tariffs have produced a mixed economic picture. Some prices, particularly for imported American goods, have risen modestly. Job losses in tariff exposed industries have been visible in regional economies. Broader macroeconomic effects have been muted in part because of resilient services sector growth and in part because of the buffering effect of energy exports. The Bank of Canada has indicated that the cumulative impact on inflation and growth remains a key part of its policy calculus.

For Canadian businesses, the tariffs are forcing a generational reconsideration of supply chains and customer concentration. Many small and medium sized exporters have spent decades building businesses around relatively frictionless access to the American market. The tariffs and the political uncertainty have made that strategic posture less viable and have pushed firms toward European, Asian, and domestic diversification.

The political backdrop

The trade tensions are unfolding against the backdrop of an unprecedented period in the Canada US relationship. The Trump administration's combination of tariffs, defence pressure, and rhetorical hostility toward Canada has shifted public opinion sharply in this country, with polling showing Canadians more sceptical of the United States than at any point in recent memory. Carney's electoral majority in April was widely interpreted as a vote in favour of a Prime Minister who could stand up to Washington.

The American political backdrop is also relevant. The administration faces midterm elections later this year that could shift the composition of Congress and indirectly affect the trade environment. Some American business groups have been pressing for tariff relief, particularly in sectors that depend on Canadian inputs. Whether those pressures lead to a meaningful policy change remains uncertain.

The Mexican comparison

Mexico's experience under the same tariff regime has been instructive for Canadian officials. President Claudia Sheinbaum has pursued a more publicly conciliatory tone with Washington while quietly maintaining many of the same negotiating positions as the Trudeau and Carney governments. Mexican officials have produced specific concessions on migration and on fentanyl interdiction in exchange for limited tariff relief on particular product categories, but the broader sector specific tariffs have remained in place for both countries.

Some Canadian commentators have argued that Ottawa should learn from the Mexican approach and adopt a more transactional tone in dealing with the administration. Others have argued that the Mexican concessions have not produced material economic benefit and that Canada should maintain its current posture. The debate is unlikely to be resolved by simple appeal to the Mexican example, given the very different starting points and political dynamics of the two countries.

What's next

Trade negotiators on both sides of the border will continue meeting through the summer, with no clear end point in sight. Carney is expected to use upcoming G7 and bilateral meetings to press the case for tariff reductions, and Canadian officials have been actively coordinating with European and Asian counterparts who face similar pressures.

The longer the standoff continues, the more durable the economic impacts will become. For Canada, the next several months will test whether the diversification strategy can produce visible alternatives to American demand in a meaningful timeframe. For the bilateral relationship, the test is whether two of the world's most integrated economies can find a way back to a more stable trading footing without permanent damage to a partnership that has defined Canadian economic life for more than a century.