Industry Minister Melanie Joly says that “we are not in normal times” as the federal government vows to protect jobs after U.S. President Donald Trump‘s threat to impose a 35 per cent tariff on Aug. 1.
Joly said that threat comes as the U.S. is “becoming weaker,” while Canada sets up new trade deals with other partners like the European Union.
“We’re in solution mode and we’re trying to make sure that, ultimately. while the U.S. is becoming weaker, we will become stronger and we will diversify,” she told reporters.
“We’re not in normal times and economy diplomacy is more important than ever.”
On Thursday night, Trump announced in a letter he would levy the 35 per cent tariff on “Canadian products sent into the United States, separate from all Sectoral Tariffs.”
In response, Prime Minister Mark Carney’s office said he would meet with his cabinet on July 15 to focus on ongoing negotiations, and convene a First Minister’s Meeting with the premiers on July 22.
“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” Carney wrote in a post on X on Thursday night. “We will continue to do so as we work towards the revised deadline of Aug. 1.”
The president’s letter once again referenced fentanyl allegedly “pouring into” the U.S. from Canada as a primary reason for the increased duties.
However, he also cited previous complaints of trade deficits and Canada’s supply management in the dairy sector.
The U.S. government’s own statistics showing miniscule amounts of fentanyl entering the U.S. from Canada were buttressed earlier this month by a report from New York think tank The Manhattan Institute, which found 99 per cent of the pills and 99 per cent of the powdered form of the drug entering the U.S. in the last decade came from Mexico.
“Canada has made vital progress to stop the scourge of fentanyl in North America,” Carney wrote. “We are committed to continuing to work with the United States to save lives and protect communities in both our countries.”
Joly was also questioned Friday on if Canadians had been “misled” about how Carney would tackle Trump’s threats in light of a lack of retaliatory measures, a premise she said she rejects.
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“We will make sure that we defend our workers, that has been at the core of everything we’ve been doing,” Joly said. “But at the same time we’re dealing with a very unpredictable U.S. administration. We’re not the only ones. That’s the case for the EU … That’s the case also for every single country on this planet.”
She added as the U.S. takes a “protectionism path,” Canada and other countries like the EU can “be in favour of free and open markets” together.
A U.S. administration official on background said that goods under the Canada United States Mexico Agreement (CUSMA) will remain exempt from the 35 per cent tariff. Energy and potash exports to the U.S. will also remain at 10 per cent.
The official cautioned no final decisions by Trump had been made.
The new threat comes as Canada and the U.S. are locked in negotiations over a wider economic and security agreement, with July 21 set as a target date.
Global News has reached out to the Prime Minister’s Office to inquire if this date has changed following Carney’s post suggesting a new Aug. 1 deadline.
Nova Scotia Premier Tim Houston criticized the tariffs in a press release Friday, calling the move “childish bullying,” despite what he said were good faith negotiations by Canada.
“This type of childish bullying is no way to treat a neighbour, friend and ally,” he wrote. “It’s exactly why Canadians are not buying U.S. products and cancelling trips to the U.S.”
Dan Kelly, president and CEO of the Canadian Federation of Independent Business, told Global News that a response should not be done in “panic.”
“This is not the time to panic. If we know anything about dealing with the Trump administration, we know that there are going to be many peaks and valleys over the next few weeks as we inch towards a deal, and we can’t necessarily interpret everything as exactly what is about to happen,” Kelly said. “We need to take this seriously, though.”
While Kelly noted a tariff by the U.S. would be felt by American consumers, if Canada responds with retaliatory duties that would impact Canadian consumers and businesses.
He said making sure CUSMA-exempted goods stay that way, telling Global News it helps some exporters avoid tariffs, including his members.
People shopping at the grocery store will need to brace but may see some help as Canada enters harvest season, said Gary Sands, president of the Canadian Federation of Independent Grocers.
“Consumers should just buckle up. I think, unfortunately, we just have to expect that it’s going to be a bit of a rough ride in the months ahead,” Sands said. “To some extent, a lot of the impact will be mitigated over the next few months as we start to harvest, see more of the homegrown Canadian products hit the shelves.”
Dennis Darby, president and CEO of Canadian Manufacturers and Exporters, told Global News his members are looking for certainty from a deal, even if some tariffs remain.
“I think what manufacturers and exporters and investors need is some certainty,” he said. “Even if there’s some level of tariff, great, just tell us what it is and then you can do business planning. That’s the real downside to all of this.”
The Retail Council of Canada echoed Darby, saying imposing the tariff on non-CUSMA exempted goods would have “serious consequences.”
“While we recognize this is, for now, a political statement and not a policy, the threat alone creates uncertainty across supply chains that are deeply integrated between our two countries,” a spokesperson for the council said in a statement.
The 35 per cent tariff, according to Trump, are separate from tariffs on the automotive industry, and on steel and aluminum exports.
Trump has also vowed a new 50 per cent tariff on copper and 200 per cent tariff on pharmaceuticals, which would also impact Canada. More than half of its copper exports go to the U.S.
The president said there would be no tariff if Canada or companies in the country “decide to build or manufacture product within the United States,” adding the U.S. would do everything to get approvals quickly if this happens.
However, he also warned that if Canada decides to raise its tariffs on the U.S., it would add that amount onto the 35 per cent tariff.
This warning isn’t new, however, as Trump has warned other countries of doing the same should they raise their duties as a response.
—with files from Global News’ Simon Little and Reggie Cecchini
