By Don Newman

August 1, 2025

Why is anyone surprised? Did anyone really think Donald Trump was going to agree to a deal that would reduce tariffs already in place on Canadian exports to the United States?

Apparently so. For the past two months Canadian politicians, businesses, the media and just about anyone who has any interest in the play of events, both internationally and domestically, has been speculating about a new, more favourable deal with Trump on tariffs being achieved by the President’s global threat deadline of August 1st.

Instead, Trump increased the tariffs already in place on some Canadian goods from 25% to 35%. The increase is a middle finger salute to Canada and could be a harbinger of things to come as this tariff war continues. Instead of gaining more tariff-free access to the United States, tighter restrictions could be coming.

In the recent negotiations some in this country took heart that others had reached apparent deals. Japan, Great Britain and the European Union all reached agreements to accept tariffs, buy billions more in American goods and, in some cases, pay money to the United States. That has reinstated their pre-existing right to export to America, but with the things they ship will priced higher than before because of the Trump tariffs they’ve agreed to.

While these bizarre capitulations were going on in July, Canada had a team of negotiators in Washington. Leading the team have been Dominic Leblanc, Prime Minister Mark Carney’s go-to minister, who has responsibility for, among other files, Canada- US trade relations. Leblanc was camped out in Washington as the August 1st deadline approached, leading the Canadian negotiators along with Kirsten Hillman, our country’s longtime ambassador to the United States, who has a background in trade negotiations.

All that didn’t matter. Trump was not going to make any deal that did not contain some form of Canadian capitulation. Prime Minister Carney repeatedly said a deal would not be agreed to unless it was good for Canada. It is therefore not surprising that there was no August 1st surprise. Trump is a zero-sum negotiator. A deal for the United States has to be good for his agenda. By definition a zero-sum deal can’t be good for Canada or any other country.

Prime Minister Carney repeatedly said a deal would not be agreed to unless it was good for Canada. It is therefore not surprising that there was no August 1st surprise.

Canada’s negotiators remain in Washington, ready to keep talking. Good luck to them. Unless there is market blowback, or the American auto industry convinces Trump his tariff approach is punitive to both manufacturers and consumers, there is scant possibility that there will be any change in Trump’s approach.

Some Canadians are realizing this. They are now looking ahead to the negotiations around CUSMA, the existing free trade agreement that includes Mexico as well as Canada and the United States. The agreement was negotiated in the first Trump administration to update the original NAFTA deal between the three countries signed in the early 1990s, and contains a clause that it must be reviewed in 2026.

The agreement has provided some protection in the current tariff dispute. Exports to the US deemed CUSMA-compliant are exempt from the new tariffs. However, that exemption does not apply to Canadian steel or copper, both hit with 50% tariffs and already facing shrinking numbers of American customers which is leading to Canadian job losses and declining profits for both industries.

The hope of many Canadians is that a review of the agreement will lead to expansion of the products and materials covered by the duty-free provisions and restore the almost duty-free access that had previously existed in North America. However, that may be too optimistic.

If the American economy has absorbed the tariffs Trump is imposing now, and the markets remain sanguine, then the President’s ardour for tariffs may only grow. A shrunken CUSMA — or maybe no CUSMA at all — may be the result. Then access to the American market maybe further restricted and only things like energy, potash and rare earth minerals would be entering the United States with low or no tariffs.

Canada must get ready for that possibility. The building-out of infrastructure to get exports to other markets must get approvals of less than the two years currently envisioned. Developing those other markets must be of a high priority. Closer alignment with major markets on other policy issues must be contemplated. The recent plan announced to recognize Palestine statehood is a good example of drawing closer to European sensibilities.

Canadians have to do a major rethinking of who we are, who we want to be and how we are going to meet those aspirations. We are told we are at a hinge point. The hinge is on a door that is closing, and we must make sure the door can also open in another direction.

Policy Columnist Don Newman is an Officer of the Order of Canada, and a lifetime member and a past president of the Canadian Parliamentary Press Gallery.