President Donald Trump today spoke with new Canadian Prime Minister Mark Carney and called the conversation “extremely productive” amid a simmering trade war between the U.S. and Canada.
The two leaders spoke Friday morning for the first time since Carney succeeded Justin Trudeau as prime minister two weeks ago. In recent days, both Trump and Carney had upped the ante in trade rhetoric, trading barbs where Trump called Canada “the 51st state” and Carney said the “old relationship we had with the United States…is over”.
Will the latest phone call help postpone next week’s scheduled tariffs on a wide swathe of Canadian goods?
The world has been watching for signs that the U.S. and Canada would diffuse the tensions, and markets dropped further Thursday after Carney made his comments and said that Canada would have to reduce its reliance on the U.S. Under the current Trump administration for tariffs against its neighbor from the north, there are only a few days until the April 2nd effective date for many tariffs on Canadian-made goods into the U.S.
Among commodities that would be most affected if the tariffs go into effect next week are:
- Auto parts for U.S.-made automobiles (already subject to a separate 25% tariff announced yesterday)
- Crude oil and other petroleum-based products
- Jet engines and nuclear reactors
- Plastics
- Lumber
- Aluminum
- Paper and cardboard products
- Prescription drugs
A softening of rhetoric: will it last?
Following today’s phone call, Trump notably called Carney “prime minister” instead of “governor” – a title he had called Justin Trudeau in recent months (referring to the 51st state rhetoric) – in a Truth Social post. Trump also mentioned wanting “a very good relationship with Canada.”
In general, Carney has taken a sharper tone with Trump specifically and the U.S. in general since taking office. In doing so, Canada’s pushback arguably improved their negotiating position with the U.S. on tariffs. Markets have been hopeful for a breakthrough.
Both Trump and Carney remain hopeful for a negotiated end to the escalating trade war and its presumed effects on increasing prices on goods for both countries. Although the U.S. took the first step in the tariff war by announcing sharp tariffs, Canada has already threatened multiple times to retaliate. And, with both sides sharply pushing back, no American or Canadian consumers will win as higher prices will become a reality.
What comes next?
The two leaders agreed to meet in-person and continue conversations after Canada’s federal election, scheduled for April 28th. Until then, markets and other interested parties will watch with anxiety over whether the tariffs scheduled for next week will be postponed.
