Prime Minister Carney, facing a self-imposed July 21 deadline to finalize a new economic framework with Washington, said Thursday night that he would pursue a revised deadline and continue defending Canadian businesses. “We will continue to do so as we work towards the revised deadline of August 1,” he wrote on social media.

Carney, elected in April, has attempted to adopt a conciliatory approach to Trump despite having campaigned on a more assertive “elbows up” policy. His government has already walked back a digital services tax and introduced a $950 million border security package to address fentanyl concerns raised by the US administration.

Tariff Confusion And Retaliation Loom

Trump's 35% tariff is separate from sector-specific levies on autos, copper, steel, and aluminum, and it remains unclear if exemptions under the US-Mexico-Canada Agreement will remain in effect. The White House did not offer immediate clarification.

In response, Canada has hinted at the reintroduction of countertariffs, particularly on US steel and aluminum. Trump has warned that any retaliatory measures would trigger an additional hike equal to the value of those duties on top of the existing 35%.

While Trump frames the tariff as a response to fentanyl flows—despite data showing less than 1% of US fentanyl seizures originate from Canada—he also cited the US-Canada trade imbalance and Canada’s dairy protectionism as justification.

Rising Political Stakes On Both Sides

Trump’s decision arrives amid a wider tariff campaign targeting 14 nations, adding fresh uncertainty to global markets. Analysts warn the move could have ripple effects across North American supply chains, especially given Canada’s reliance on the US, which absorbs more than 75% of its exports.

Carney’s political gamble—balancing domestic pressure with hopes of salvaging cross-border ties—now faces its stiffest test. Despite softer rhetoric, Canadian officials remain unsure of what further actions will satisfy the Trump administration, raising concerns about trade stability and future diplomatic relations.