Mark Carney, the Canadian Governor of the Bank of England, will be on his second trip to Washington this year. First, he plans to breathe new life into the Canada-U.S. trade negotiations that have run aground. The meeting with President Donald Trump, which will take place shortly after their initial encounter in the Oval Office in May, aims to address various tariffs that have strained bilateral relations. First, recall that Trump’s own description of their first meeting—calling it “friendly”—would set a precedent for a much more fruitful conversation.
Underneath Carney’s visit is a theme of increased tension over trade. Canada’s now the only G7 country to not have locked in a trade deal with the United States so far this year. This creates a very unique pressure on Canada to balance the intricacies of its new relationship with the Trump administration. In the last few weeks, Trump has brought new life to talks of making Canada “the 51st state.” This comment underlines his administration’s battened down roots on trade in all the right ways.
Carney’s stated goal on this visit is to rescue stalled trade negotiations. He’s up against passionate pushback from powerful actors, such as Pierre Poilievre, the leader of Canada’s main opposition Conservative Party. Poilievre saw the significance of Carney’s visit as he touted his foreign policy address. He then stated that if a meaningful trade deal wasn’t reached, it’d be a failure.
The prevailing mood – aka the nightmare from a Canadian trade interest’s perspective. To create a uniform 35% levy on every Canadian product he imposed some targeted tariffs such as a whopping 50% on steel, 35% on softwood lumber and 25% on cars. These measures have taken a toll on Canadian exporters. Most importantly, they have inspired a remarkable amount of discussion on the need for relief from these draconian tariffs. According to recent media reports, US steel tariffs may be on the verge of relaxing. This amendment would have a profound impact on the terms of the deal being negotiated.
In anticipation of these conversations on the campaign trail, Carney has already given up quite a bit since assuming office. He repealed a Digital Services Tax that Trump had publicly condemned. On top of that, he eliminated all but one of Canada’s retaliatory tariffs on American products. Carney dropped two long-standing legal challenges to American duties on Canadian softwood lumber. This step was meant to reduce animosity and build trust and respect ahead of the talks.
Yet even with these efforts, Trump’s comments still suggest an underlying and deeply rooted skepticism about the fundamentally different trade landscape. At a recent press briefing, Trump acknowledged Carney’s upcoming visit and remarked, “I guess he’s going to ask about tariffs,” further asserting that “a lot of companies from Canada are moving into the United States” and “everybody is moving back to the US.” These comments are indicative of Trump’s continuing desire to see U.S. economic interests put first in trade negotiations.
For his part, Carney has consistently lowballed his connection to Trump, calling it “good” on the record. He claims that they talk all the time over text. As the stakes get higher, he has to navigate a complicated political environment. His actions draw intense watch from his own friends and opponents in Washington, DC.
As recently as last week, Dominic LeBlanc, Canada’s Minister of Intergovernmental Affairs and Trade said that “progress” is being made toward such an agreement. This newfound optimism should come as welcomed relief to Canadians eagerly awaiting a resolution to the year-long trade saga. Still, the heat is on Carney to produce some real results on this important trip.
Carney appears to be getting himself mentally prepared for his arguments with Trump. He will need to deal with the realities posed by tariffs, but the bigger picture created by our fraught trade relationships. Coming home without a substantive deal would be damaging to Canadian companies. It will likely be damaging to Carney’s political currency back home in Canada.
Poilievre’s warning remains clear:
“If you only return with excuses, broken promises and photo ops, you will have failed our workers, our businesses and our country.” – Pierre Poilievre