Canadian Prime Minister Mark Carney has rejected pressure to make further concessions to secure a quick trade deal with the United States, vowing that Trump will not dictate the terms as the CUSMA review deadline looms and tariffs continue to hammer both economies.
Carney Draws the Line
In his most forceful statement yet on the trade standoff, Carney told reporters in Ottawa on Friday that negotiations with Washington would “take some time” and that Canada would not rush into a deal simply to end the pain of Trumps tariffs. “We are not going to be dictated to on the terms of our own economic sovereignty,” Carney said. “The old relationship is over. What comes next has to work for Canadians.”
The prime minister specifically rejected a reported US offer of limited tariff relief in exchange for Canadian concessions on dairy supply management and digital services taxes. Two senior Canadian officials, speaking on condition of anonymity, told CBC News that the offer was a non-starter because it would have required Canada to unilaterally lower barriers without any guarantee that Trump would not reimpose tariffs later.
“There is no point making concessions for a deal that can be torn up the next day,” one official said. The sentiment reflects deep scepticism in Ottawa about Trumps reliability as a negotiating partner, given his history of imposing tariffs on allies and withdrawing from agreements.
The CUSMA Review Looms
The standoff comes ahead of the mandatory review of the Canada-United States-Mexico Agreement (CUSMA), which is scheduled for 2026. Trump has repeatedly threatened to use the review to extract further concessions from both Canada and Mexico, particularly on rules of origin for automobiles and dairy market access.
US Commerce Secretary Howard Lutnick has publicly stated that Washington wants Canada to dismantle its supply management system for dairy, eggs, and poultry, a demand Ottawa has consistently refused. The system, which controls production and sets minimum prices for farmers, is a politically sensitive issue in Canada, particularly in Quebec and Ontario where dairy farmers hold significant electoral influence.
Carney, a former central banker who led both the Bank of Canada and the Bank of England, has framed the trade dispute as a fundamental renegotiation of the Canada-US relationship rather than a temporary disagreement. His approach differs sharply from his predecessor Justin Trudeaus more conciliatory tone.
Economic Toll Mounts on Both Sides
The trade war is exacting a growing economic toll on both nations. Canadian exports to the United States fell 12 percent in the first quarter of 2026 compared to the same period last year, according to Statistics Canada. The automotive sector, which accounts for nearly a quarter of bilateral trade, has been particularly hard hit, with several plants in Ontario reducing shifts due to tariff uncertainty.
On the American side, US agricultural exports to Canada have declined by 8 percent, and consumer prices for Canadian lumber and aluminium have risen sharply. The National Association of Manufacturers has warned that prolonged trade uncertainty is discouraging investment on both sides of the border.
An Angus Reid poll released this week found that 62 percent of Canadians believe the country should hold firm against Trumps demands even if it means a prolonged trade war. Only 28 percent said Canada should make concessions to secure a deal. The poll also found that 71 percent of Canadians believe Trump will not honour any new agreement he signs.
Diversification Strategy Accelerates
Carney has used the trade war to accelerate Canadas economic diversification away from the United States. His government has fast-tracked trade negotiations with the European Union, the United Kingdom, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members. Canada signed an enhanced trade agreement with Japan in March and is in advanced talks with India on a limited goods agreement.
“Canada will always trade with the United States, but we can no longer afford to be dependent on a single market that can be weaponised against us,” Trade Minister Mary Ng told Parliament on Thursday. The government has also announced a new critical minerals strategy designed to make Canada a more attractive supplier for allied nations seeking alternatives to Chinese rare earths.
What Happens Next
With neither side showing willingness to compromise, the trade war appears set to continue for months. The CUSMA review, which could theoretically result in the agreements termination with six months notice, adds a deadline that neither side wants to trigger but both are using as leverage.
Carney has scheduled a meeting with European Commission President Ursula von der Leyen next week to coordinate responses to Trumps tariffs, a move that signals Canadas alignment with the EU in the broader trade war. The meeting will also discuss potential joint action at the World Trade Organisation.
For Canadian businesses caught in the crossfire, the message from Ottawa is clear: adapt, diversify, and prepare for a long fight. Whether that resolve holds as the economic pain deepens remains the central question of Canadas trade war.
