Carney Gets Trump on the Phone as Canada-U.S. Tariff Fight Remains Unresolved

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A phone call can matter in a trade war, especially when formal negotiations are frozen. Prime Minister Mark Carney said on October 21 that he spoke with U.S. President Donald Trump “for quite some time,” touching on trade alongside international issues. But neither government announced a breakthrough, a tariff rollback, or a formal restart of negotiations. The conversation instead highlighted a relationship that is still functioning at the highest level while the economic dispute below it remains unresolved.

That tension is becoming increasingly tangible. On the same day, Ottawa and Ontario unveiled an $8.7 billion package aimed at steel, autos and critical minerals. For workers in Hamilton, suppliers in Windsor and businesses that move goods across the border, the unresolved tariff fight is no longer just diplomatic theatre. It is shaping investment decisions, production plans and jobs.

A Direct Line Remains Open

Carney’s call with Trump is significant because it shows that the political channel between Ottawa and Washington has not closed, even though formal trade negotiations have been suspended since August. Carney said the conversation covered a wide range of subjects, including some trade issues, while also discussing Iran and other Middle East developments. He gave no indication that Trump had agreed to reduce tariffs or that negotiators had been sent back to the table.

That makes the call more useful as a signal than as a settlement. Canadian officials have continued speaking with senior U.S. counterparts even without formal bargaining sessions, and Ottawa has repeatedly said it remains open to a deal that protects Canadian sovereignty and key industries. In practical terms, Carney is trying to preserve access to the one person who can change the U.S. tariff posture quickly, while avoiding the appearance that Canada is prepared to accept any terms simply to restore stability.

How the August Trade Talks Fell Apart

The current standoff is rooted in the collapse of intensive negotiations in August. Carney said Canada had been willing to remove remaining retaliatory tariffs on strategic sectors such as steel, aluminum and autos if Washington substantially lowered its own duties. Ottawa was also prepared to encourage provinces to put U.S. alcohol back on shelves and consider administrative steps related to supply management without dismantling the system or changing Canadian tariff-rate quotas.

The talks still fell apart. Carney said the U.S. introduced last-minute terms that Canada considered uneconomic and unfair, and he drew explicit red lines around sovereignty, key industries, French-language protections and culture. He then suspended negotiations and ordered the Canadian team home. Washington blamed Canada for the failure, but the practical result was the same: tariffs that negotiators had spent weeks trying to reduce instead became the foundation for a broader retaliatory cycle that remains in place two months later.

The Tariff Fight Has Spread Across the Border

The tariff conflict is now a patchwork rather than one simple border tax. The United States used Section 338 of the Tariff Act of 1930 to impose 50 per cent duties on a range of Canadian goods after the August breakdown. Ottawa says the affected trade was worth about C$27.6 billion and responded with dollar-for-dollar countermeasures on U.S. imports, using rates of 15, 25 and 50 per cent depending on the product.

The escalation did not stop there. After Canada’s counter-tariffs took effect on September 8, the Trump administration announced import bans on selected Canadian products, including some alcohol, dairy goods and motorcycles, while modifying the list of goods subject to tariffs. Canada’s countermeasures cover sectors including steel, aluminum, dairy, appliances, agricultural equipment, pulp and paper and electronics. For companies, that means the trade dispute is not confined to a single headline rate; exposure depends heavily on the product, tariff authority and date of entry.

Autos Remain the Central Fault Line

Autos remain the hardest part of the dispute because the industry was built around a border that parts and vehicles cross repeatedly during production. After the August talks failed, Trump threatened to raise U.S. tariffs on Canadian cars, trucks and automotive parts to 50 per cent starting January 1, 2027. Reuters reported that the deal under discussion before the breakdown would have reduced the top-line tariff on Canadian cars and light-duty trucks from 25 per cent to 15 per cent, but disagreements included the treatment of medium- and heavy-duty trucks.

The stakes are large for Canada. The federal government says the automotive sector supports more than 120,000 direct jobs and contributes over $16 billion annually to GDP. Carney has also said Canadian auto exports to the United States have fallen by more than 10 per cent during the trade conflict. That helps explain why Ottawa is treating autos as an industrial-policy issue, not merely a negotiating concession.

Steel Shows the Human Cost of the Dispute

Steel offers a more immediate picture of what the trade war looks like on the ground. Cleveland-Cliffs said it would idle finishing operations at Stelco’s Hamilton facility, with up to 500 workers affected, as the company cited U.S. tariffs, weak demand and import pressure. The dispute has become especially politically charged because Cleveland-Cliffs bought Stelco in 2024 and the federal government has argued that employment commitments made around that acquisition should be honoured.

The broader industry has been forced to redirect sales. Reuters reported in October that Canadian steel shipments to the United States had fallen by roughly 60 per cent after U.S. tariffs rose, while stronger domestic demand from energy, mining and infrastructure helped offset part of the damage. Ottawa says steel directly supports more than 23,000 Canadian jobs and is tied to about 172,000 jobs in fabricated metals. Those numbers turn tariff policy into a household issue in steel communities, where decisions made in Washington can quickly become shift cuts or layoffs.

Ottawa and Ontario Are Spending to Reduce the Shock

The $8.7 billion Canada-Ontario package announced on October 21 is designed to reduce that vulnerability while the trade fight continues. The centrepiece is a Joint Steel Action Fund backed by $3.55 billion from Ottawa and $1.67 billion from Ontario over five years. The governments say the money will support new production, domestic demand and access to overseas markets, while “Buy Canadian” and “Buy Ontario” procurement policies are intended to direct more public spending toward Canadian steel.

The plan also includes $2.5 billion over two years for large automotive capital projects, split between the federal and Ontario governments, and up to $1 billion in new federal support for road infrastructure tied to critical mineral development in Northern Ontario’s Ring of Fire. The strategy is notable because it does more than compensate firms for tariff losses. It tries to reshape where Canadian industry sells, what it produces and how much demand can be generated at home if U.S. access remains less reliable.

Strong Trade Numbers Come With an Important Warning

Recent trade data show why the economic picture can be confusing. Statistics Canada reported that Canadian exports to the United States jumped 8.1 per cent in August while imports from the U.S. fell 2.5 per cent. Canada’s monthly merchandise trade surplus with the United States consequently widened from $6.1 billion in July to $11.2 billion in August, the largest positive monthly change in that bilateral balance on record.

Those figures do not necessarily mean tariffs were helping Canadian exporters. Statistics Canada specifically warned that the announcement of new U.S. tariffs may have pushed importers to accelerate shipments before the duties took effect. Several categories targeted by tariffs contributed to the August increase, making the month partly a story of timing. At the same time, Canadian exports to countries other than the United States fell 8.5 per cent after a strong July. The result is a reminder that one strong month cannot settle the larger question of whether companies can adapt to a prolonged trade rupture.

Courts and CUSMA Add Two More Layers of Uncertainty

The dispute is also moving through courts and trade institutions, adding uncertainty outside the negotiating room. On October 20, New Jersey-based food importer Gellert Global Group sued in the U.S. Court of International Trade to challenge Trump’s use of Section 338 against Canadian goods. The company, which imports Canadian cheese, is asking the court to stop the tariffs and order refunds. The case is pending, so it offers Canada no immediate relief, but it could test a tariff authority that had not previously been used this way.

At the same time, CUSMA remains in force but was not renewed at its July 2026 joint review because the United States declined to extend it in its current form. Under the agreement’s review mechanism, annual reviews now continue unless all three countries agree to extend the pact; absent an extension, the current term runs to 2036. That means the bilateral tariff fight is unfolding inside a larger debate over the future rules of North American trade.

Canada Is Talking to Trump While Building Other Options

Carney’s broader response is increasingly built around two tracks: keep talking to Trump while making Canada less dependent on the outcome of those conversations. Ottawa has set a goal of doubling non-U.S. exports over the next decade, and Carney’s October 21–24 visit to Türkiye is being presented as part of a wider push for new trade, investment, energy and defence relationships. Similar outreach to Europe has carried the same message: the U.S. will remain essential, but it should not be Canada’s only strategic option.

That is why the latest phone call matters without being a breakthrough. A direct conversation can reopen formal talks, narrow a sectoral dispute or create room for tariff relief, but none of those things has happened yet. The clearest signs of progress would be a scheduled negotiating round, movement on auto and metals tariffs, or a concrete framework for the next CUSMA review. Until then, Canada is preparing for a relationship in which cooperation continues, but privileged access to the U.S. market can no longer be assumed.

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