Canada Finance Minister Downplays Odds of Tariff-Free Deal With US

Canada’s finance minister signaled that any trade deal with the US is likely to include at least some tariffs, and repeated that the country’s dairy and poultry protections won’t be on the table during negotiations.

“There’s not evidence to suggest that you can have a trade deal with the US without tariffs,” Finance Minister François-Philippe Champagne said Thursday in an interview with Bloomberg Television.

The comments underscore a shift in expectations within Prime Minister Mark Carney’s government. Until recently, Canada’s stated goal was to try to get all of US President Donald Trump’s tariffs removed. Now, the focus appears to have shifted to reducing tariff levels and carving out as many exceptions as possible.

So far, the government has responded to many of Trump’s key grievances about Canada. Carney’s administration suspended its digital service tax targeted at technology firms and boosted spending for its military and border control. Champagne spoke Thursday with Bloomberg’s Oliver Crook.

Still, the country currently faces levies on its auto, steel and aluminum exports, and Trump has threatened a 35% rate on some other goods by Aug. 1 unless there’s a negotiated deal. Carney said this week  he expects those talks will “intensify” as the date draws nearer.

“We are in a world where, there’ll be some form, sadly, of trade restrictions that have been put in place and some level of tariffs,” Champagne said during the interview in South Africa, where he’s attending Group of 20 meetings.

“From our perspective, for us, we are going to double down to make sure that we can get the best possible deal,” he added.

Carney has repeatedly said that the country’s protections on dairy and other agricultural sectors — which place limits on the amount of tariff-free imports from US producers — are non-negotiable. The system is known as supply management.

“We’ve been clear from the get go that supply management is off the table,” Champagne said.

The Canadian economy is one of the word’s most vulnerable to Trump’s trade policy due to its heavy reliance with its southern neighbor, where about three-quarters of its goods exports were shipped last year.

At the same time, Champagne says he’s regularly communicating that Canada is a major consumer of US products too — buying $440 billion of goods and services last year.

“I remind our American friends, always, that we are the largest customer in the US,” he said.

In recent months, Carney’s government has increased its efforts to build stronger trade ties with European and Asian allies.

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