The US and Canada agreed to finalise a trade deal within 30 days to resolve issues caused by tariffs and countermeasures.
The US President Donald Trump and Canada’s Prime Minister Mark Carney agreed this week to finalise a trade deal within 30 days to resolve the conflict caused by US tariffs and Canadian counter duties.
The Bank of Canada Governor Tiff Macklem said Wednesday, 17 June 2025, that he welcomes a new Canada-US trade deal that could lead to tariff removal but warned inflation may rise if tariffs remain.
“Restoring open trade between our countries is critical to jobs and growth in Canada,” said Macklem. “It is also important for prices and inflation,” he said, calling the understanding between the two leaders a “very welcome news.”
Trump has imposed a series of tariffs on Canadian steel, aluminium, and automobiles, prompting Canada to respond with its countermeasures.
Canada’s finance minister, François-Philippe Champagne, confirmed on 8 April 2025 that new countermeasures, announced on 2 April 2025, in response to US tariffs on the Canadian auto industry, took effect on 9 April 2025. These measures aim to pressure the US to remove what Canada calls unjustified tariffs.
In response, on 30 May 2025, Trump announced that his administration plans to raise tariffs on imported steel and aluminium from 25% to 50%.
This trade dispute has significantly impacted Canada’s exports, while also hindering job growth and investment.
“If tariffs are not removed, we expect they will be passed through to higher consumer prices,” Macklem said.
Macklem stated that any deal between the two countries should roll back tariffs, given Canada’s reliance on the US, which takes three-fourths of its exports.
Canada’s annual inflation rate dropped to 1.7% in April after some tax changes, but core inflation measures rose above the central bank’s 1% to 3% target range.
The Bank of Canada noted that underlying inflation is rising faster than expected, and tariffs could potentially keep prices higher for longer.
Earlier, on 30 January 2025, Trump imposed a 25% tariff on imports from Canada.
Later, on 2 April 2025, Trump signed an executive order imposing a 10% baseline tariff on imports from all countries, including Canada, which was expected to take effect on 9 April 2025.
However, Trump delayed the “reciprocal” tariffs, initially set for 9 April 2025, with a 90-day extension. This delay did not apply to tariffs on China.
