Carney says a U.S. trade deal without some tariffs is unlikely

Prime Minister Mark Carney said Tuesday U.S. President Donald Trump seems wedded to tariffs and any trade deal with the Americans may include accepting some levies on exports.

Speaking to reporters ahead of a cabinet meeting on Parliament Hill about the trade war, Carney said in French that all of Trump's trade agreements to this point have included some tariffs.

He said "there's not a lot of evidence right now" that the U.S. is willing to cut a deal without some tariffs included.

Indeed, Trump's trade arrangement with the U.K., a country with which the U.S. has a trading surplus, includes a 10 per cent baseline tariff.

Carney did not say if he's willing to accept tariffs. At last month's G7 summit after a meeting with Trump, Carney said Canada will sign an agreement "that's in Canada's best interest, and only that."

Carney said under Trump's current framework Canada has "almost free trade" with the U.S. and that's something he wants to see continue. That's a reference to the tariff exemptions granted to Canadian goods that are compliant with the Canada-U.S.-Mexico Agreement (CUSMA).

At the outset of this trade war, the White House estimated some 62 per cent of Canadian exports were not compliant with the trade deal — some companies opted to pay very low duty rates rather than go along with the paperwork required for free access. A recent RBC report suggests compliance has improved since Trump slapped on tariffs and most goods are sold into the U.S. tariff-free.

But Carney said Tuesday "there are obviously problems" with the U.S. sectoral tariffs that do apply universally to steel, aluminum, auto exports and the threatened ones on pharmaceuticals, lumber and copper. 

Those so-called Section 232 tariffs have been particularly damaging to the Canadian economy, leading to job losses and a drop in exports.

Those tariffs take their name from the section of a U.S. trade law that allows the president to impose levies on certain goods that are said to threaten "national security."

"We need to stabilize the situation for Canada," Carney said.

"The government has consistently stood up for Canadian workers and businesses throughout these negotiations. We'll continue to do so. I expect that discussions will intensify between now and the end of the month and we'll be working hard on that."

Last week, Trump sent a letter to Carney saying he's moving to bump the existing 25 per cent border-related tariff rate on Canadian goods — the tariff that does not apply if a good is CUSMA-compliant — to 35 per cent by Aug. 1.

A White House official told CBC News that the CUSMA compliance rule will still apply even if the elevated tariff rate is applied next month.