Canada to consider retaliating against latest Trump tariffs, Carney says

"We are intensifying our trade negotiations with the United States and will not hesitate to defend our interests if we have to," Carney told the meeting in Charlottetown, Prince Edward Island, describing the new US measures as unwarranted.

"Everything's on the table if there's no agreement," he said, speaking of potential countermeasures without providing specifics.

Trump and Carney agreed this week to intensify bilateral trade talks. This is occurring against the backdrop of Trump's decision on July 1 not to extend the United States-Mexico-Canada Agreement trade pact ‌for another 16 years, leaving it in force but requiring annual reviews.

The US is negotiating with Canada and Mexico in separate tracks, and Washington has said it is making more progress with Mexico. That raises the risk that the US might seek to force concessions on Canada that Mexico agrees to.

Carney said his government wanted to reach a comprehensive deal rather than agreements covering individual trade sectors.

While Carney said he and provincial leaders were united, the 10 provinces are split over how to react. Alberta and Saskatchewan, which export crude oil and potash respectively to the United States, have ruled out export curbs or duties to increase pressure on Washington.

Ontario Premier Doug Ford called for Canada to match the US tariffs, "dollar for dollar," while acknowledging Carney was in a difficult position.

"One day, the prime minister is with him side by side, and the next thing, President Trump turns on him like a rabid dog," Ford said.

British Columbia Premier David Eby suggested his province could cut US access to its critical minerals exports, which include copper, zinc and aluminum.

"If the prime minister calls British Columbia and says he needs support with some big sticks to have conversations at the table, then we will be there," he said.

US Trade Representative Jamieson Greer said on Wednesday he hoped to strike some interim trade deals with Mexico and Canada this year while tackling thornier changes to the US-Mexico-Canada Agreement in 2027, his strongest signal yet that the pact will not be renewed this year.

"I would love to have by the end of the year at least some arrangements; one with Canada, one with Mexico," Greer told a Senate Finance Committee hearing.

He said issues such as tighter rules of origin for autos and labor and environmental regulations could require more time and discussion "including with Congress in the following year."

Greer's comments left little doubt that a full renegotiation of the six-year-old US-Mexico-Canada Agreement will bleed into next year, prolonging business and investment uncertainty that Canada and Mexico have been seeking to ease.

Mexico's Economy Ministry declined to comment on Greer's remarks.

Gabriel Brunet, a spokesperson for Dominic LeBlanc, Canadian minister responsible for US-Canada trade, said the minister spoke with Greer on Tuesday after Carney and Trump agreed to intensify trade talks.

"We look forward to further engagement on addressing outstanding issues with the US to the mutual benefit of our citizens," he said.

Greer said the US is "moving with all due speed" on the potential interim agreements, adding that he wanted to have options for Trump, Mexican President Claudia Sheinbaum and Canadian Prime Minister Mark Carney to consider by the end of the year. He did not provide specifics on what the agreements could look like.

"Greer’s testimony confirms that the United States is no longer aiming for a clean USMCA renewal this year," said Michael Camunez, chief executive of Monarch Global Strategies, which advises firms doing business in Mexico.

"The likely outcome is an interim political agreement that keeps negotiations moving but leaves the hardest issues — and much of the investment uncertainty — unresolved."

USMCA and its predecessor, the North American Free Trade Agreement, have defined North America's economy for 32 years, underpinning nearly $1.6 trillion in once-duty-free regional trade, with Mexico and Canada sending the vast majority of their exports to the United States.

But US President Donald Trump last year fundamentally altered the trade pact by imposing "Section 232" national security tariffs of 25% on autos and 50% on steel and aluminum from Mexico and Canada — duties from which they are now seeking relief.

Luis de la Calle, a former Mexican trade official, said that for an interim agreement with Mexico, "a good place to start is elimination of the 232 duties."

The relationship between Canadian and US officials has been tense in recent months, with Trump announcing a 50% tariff on some $20 billion in Canadian goods, including beer, dairy and hockey sticks, this week to punish Ottawa for retaliating against Trump's autos and metals tariffs.

Greer arrived in Mexico City on Tuesday to join bilateral talks with Mexico on potential USMCA revisions. Canada has been excluded from the negotiations, raising the risk that it will be forced to accept terms agreed by Mexico.

The Trump administration is demanding that Mexico raise the level of regional content in North American-built cars to qualify for preferential trade access, part of an effort to incentivize more production in the US and North America and restrict Chinese-origin content in vehicles.

While Mexico broadly agrees with these goals, it differs on how to achieve them and has first sought reductions in US tariffs on autos, steel and aluminum.

Trump has been sharply critical of the US-Mexico-Canada Agreement that he signed into force in 2020, often threatening to terminate the pact due to persistent US trade deficits with Mexico and Canada.

On July 1, Trump chose not to renew the agreement, a decision that triggers a 10-year countdown to its expiration unless all three countries agree to renew it with changes.

Greer told senators that for Trump to agree to an interim trade deal with Mexico, some non-trade disputes may need to also be resolved, including US demands that Mexico tighten border security and improve compliance with a 1944 Rio Grande River treaty to supply Texas farmers with irrigation water.

"The president is going to have a hard time agreeing to renewal or even revisions if Mexico isn't playing ball in all areas, and the water treaty is one of them," Greer said.