Trump, Carney sit down in pursuit of ‘the right deal’ on trade

President Trump said Tuesday his relationship with Canada and its prime minister, Mark Carney, had “come a long way” as the pair tried to navigate conflicts around tariffs and which nation dominates the steel and car industries.

Mr. Trump said he loves Canada and its people. But the countries are competing over mutual areas of business and whether tariffs should be charged on Canadian products when they enter U.S. markets.

“It’s a natural business conflict — nothing wrong with it — and I think we’ve come a long way over the past few months,” Mr. Trump said at the start of an Oval Office meeting that focused on trade and international conflicts such as the war in Gaza.

Mr. Carney hailed Mr. Trump as a “transformative president” who resolved global conflicts and got NATO allies to increase their defense spending.

“The merger of Canada and the United States,” Mr. Trump chimed in.

“That wasn’t where I was going,” Mr. Carney said.

Beyond the laughs, both leaders are trying to renegotiate the U.S.-Mexico-Canada Agreement to defuse trade tensions. That pact was negotiated during Mr. Trump’s first term and is set for a formal review next year.

Negotiations have started ahead of time, given Mr. Trump’s aggressive use of tariffs.

Mr. Carney is trying to protect his car, steel and lumber industries as Mr. Trump leverages the American consumer base to impose whopping tariffs on those sectors and a blanket 35% tariff on many other Canadian goods, hoping to close a trade deficit that reached $62 billion in 2024.

“There are areas where we compete, and it’s in those areas that we have to come to an agreement that works,” Mr. Carney said. “We’re going to get the right deal.”

American farmers, automakers and distilleries are facing higher costs and foreign blowback from U.S.-imposed tariffs as Mr. Trump tries to steer the economy into an America First posture that puts U.S. manufacturing ahead of imports.

Some Canadian provinces refuse to sell American-made alcohol in their stores, causing a large drop in sales for U.S. distilleries. The Distilled Spirits Council of the United States said American liquor exports to Canada fell 85% in the second quarter of this year.

The economic fallout worries Mr. Trump’s critics, who say his hard-charging trade policies are boomeranging on America.

“President Trump’s tariffs on Canada have raised prices for working families at a time when costs are already out of control, and they’re making it harder for our own manufacturers to stay competitive,” Sen. Jeanne Shaheen, New Hampshire Democrat, said. “As America faces mounting instability and security threats around the world, we need to deepen our ties with our closest allies like Canada, not damage them with self-defeating trade wars and childish rhetoric around annexation.”

Mr. Trump shows no signs of backing off on his use of tariffs, which are taxes on foreign goods when they enter U.S. markets. He says they create leverage over foreign nations, protect homegrown industries and reap billions in revenue for the U.S. Treasury.

Mr. Trump’s approach to Canada has gone through several twists since the start of his term in January.

He imposed 25% tariffs on many Canadian goods early in the year, citing a lack of progress on fentanyl trafficking across the northern U.S. border.

Mr. Trump in July settled on a 35% tariff on Canadian goods, though Mr. Carney says 85% of trade remains tariff-free due to USMCA exemptions.

“Canada and Mexico have been treated relatively better than other countries that have free-trade agreements with the United States. For products that are compliant with the USCMA, the extra tariffs haven’t been applied,” said Jeffrey J. Schott, a senior fellow at the Peterson Institute for International Economics.

However, Canadian lumber will be subject to a 45% tariff starting Oct. 14 on national security grounds, which is the justification Mr. Trump used for tariffs on Canadian-produced cars, steel and aluminum.

“This is going to be a continuing problem — of U.S. demands to sustain the protection [of certain industries] and expand it to different sectors, and the definition of what’s a national security interest to the United States is becoming more elastic,” Mr. Schott said.

Mr. Trump could lean further into sector-specific tariffs if the Supreme Court strikes down his use of the International Emergency Economic Powers Act to impose sweeping, nation-by-nation tariffs, such as the 35% on Canada over the fentanyl issue.

The Canadians have made concessions in pursuit of a new trade agreement.

Mr. Carney and Ottawa lawmakers rescinded a digital tax on U.S. tech companies and, in August, dropped reciprocal tariffs on U.S. goods. 

Canada is no longer taxing American products that comply with the USMCA, though levies on U.S. steel, aluminum and cars remain in place.

Mr. Carney visited Mr. Trump at the White House on May 6, shortly after he was elected prime minister. 

The prime minister bluntly told Mr. Trump back then that Canada was not for sale as the president teased the north about annexation. Still, the sitdown was cordial and set a positive tone.

Tuesday’s session ended in laughs after a reporter asked Mr. Trump why he called Mr. Carney a “great man” but hadn’t agreed to a trade deal.

“Because I want to be a great man, too,” the president said.