Trump warns Canada trade deal at risk over Palestine recognition
Since his return to the White House, Trump has levied 25% tariffs on Canadian goods not covered by the United States-Mexico-Canada trade pact (USMCA).
In July, he threatened to raise tariffs on Canada to 35% on August 1 because of unsubstantiated concerns over an 'invasion' of fentanyl from Canada.
A White House official, who spoke on the condition of anonymity to discuss internal deliberations, said it is likely that USMCA-compliant goods would remain exempt but that Trump would make the final decision.
Nearly 60% of US imports from Canada were USMCA-compliant in May, according to data from the US Commerce Department, up from 34% in January.
Trump has separately imposed tariffs on Canadian steel, aluminium, and autos.
Trump threatened sweeping tariffs on Canadian imports as Canada joins G7 allies in recognising Palestine. Photo / Getty Images
Canadian officials have for months travelled to the US to seek a deal that would lift the levies, but they have recently said it is likely that any agreement with the US will involve some level of tariffs. Carney said Wednesday that negotiations might drag on beyond August 1.
Canada's Foreign Ministry did not immediately respond to a request early Thursday for comment on Trump's Truth Social post.
Carney was elected leader of Canada's Liberal Party in March and led it to a comeback victory in April against a backdrop of rising anxiety over Trump, while running on an explicitly anti-Trump platform.
Carney declared the traditional US-Canada relationship 'over' and pledged to fight back with targeted retaliatory tariffs. When Trump repeatedly mused about the US annexing Canada, Carney said his country was 'not for sale'.
In recent months, Carney has tried to use flattery and firmness with Trump – to mixed results.
Trump has called him 'a nice gentleman'. But in June, Trump abruptly halted trade talks with Canada over the country's digital services tax, calling it 'a direct and blatant attack' on the US and branding Canada as a 'difficult' partner.
The Canadian Government later said it would rescind the tax. Days later, Trump threatened more tariffs.
Now, geopolitics could further destabilise the talks.
Canada is the third major US ally in a week, after France and Britain, to say it is prepared to change its decades-old stance on Palestinian statehood as outrage has grown over the rapidly deteriorating humanitarian situation in Gaza.
Canada is the third Group of Seven nation to back Palestinian statehood, following France and Britain. Photo / Getty Images
Local authorities say more than 60,000 people – including 18,500 children – have been killed in the Israeli military campaign against Hamas in Gaza. Israel has restricted aid into the enclave, prompting the UN to warn about 'mounting evidence of famine and widespread starvation'.
Trump acknowledged Monday that there is 'real starvation' in Gaza, breaking with Israeli Prime Minister Benjamin Netanyahu, who said Monday that 'there is no starvation in Gaza, no policy of starvation in Gaza'.
Yet on Tuesday, when asked about France's and Britain's endorsements of a Palestinian state, Trump said: 'You could make a case that you're rewarding Hamas if you do that. And I don't think they should be rewarded. So I'm not in that camp'.
Canada's announcement was met with praise from Palestinian officials and harsh criticism in Israel.
The Palestinian Authority's Foreign Ministry said in a statement posted on X:
'This courageous and principled decision marks a significant step towards justice, peace, and the long-overdue realisation of the Palestinian people's inalienable right to self-determination.'
The Israeli Foreign Ministry said: 'The change in the position of the Canadian government at this time is a reward for Hamas and harms the efforts to achieve a ceasefire in Gaza and a framework for the release of the hostages'.
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