Trump Says Tariffs Have Canada Treating the U.S. ‘Extremely Nicely’ as Trade Talks Drag On

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U.S. President Donald Trump is claiming his aggressive tariff strategy is changing Canada’s approach to Washington, even as negotiations between the two countries remain far from settled. Speaking at a campaign rally in South Carolina on October 29, Trump said Canada had been treating the United States “extremely nicely” and credited his tariffs with improving the relationship.

The remarks came during a particularly tense period for North American trade. Canadian officials have acknowledged limited progress in negotiations, major tariffs remain in place, and businesses continue to face uncertainty over their access to the American market.

For Prime Minister Mark Carney, the challenge is balancing the need for a workable agreement with protecting Canadian industries and economic independence. Trump’s latest comments suggest he believes the pressure is working, but the negotiations themselves tell a more complicated story.

Trump Credits His Tariffs for Canada’s Changing Approach

Donald Trump delivered his latest assessment of Canada during an October 29 campaign rally in Rock Hill, South Carolina. The president argued that tariffs imposed on Canadian goods had strengthened America’s negotiating position and encouraged Ottawa to adopt a more accommodating approach. His remarks came as he defended tariffs on steel and aluminum, which he has repeatedly promoted as instruments for protecting American manufacturing. Trump told the crowd that Canada was learning from the experience, declaring, “They’re treating us extremely nicely lately.” The comments reflected his broader argument that imposing economic penalties can persuade trading partners to change their behaviour and accept Washington’s demands.

However, Trump’s description of improving relations should not be confused with confirmation that Canada has agreed to major concessions. Canadian officials have continued to insist that any agreement must serve the interests of both countries, particularly in industries vulnerable to American tariffs. The president’s statement also arrived just days before the November 3 U.S. midterm elections, when trade policy has become politically sensitive in manufacturing and border communities. For Canadian businesses, the distinction matters. A friendlier presidential assessment may indicate a change in diplomatic tone, but companies cannot make investment decisions based on political remarks alone.

Trade Negotiations Have Struggled Since August’s Breakdown

The current negotiations are taking place against the backdrop of a major diplomatic setback in August 2026. Canada withdrew from discussions on August 21 after the Carney government concluded that American negotiators had introduced unacceptable demands near the end of the process. Carney subsequently argued that Washington’s proposed terms threatened Canada’s ability to protect important domestic industries and make independent economic decisions. The automotive sector was a particular concern because manufacturing operations in Ontario are deeply connected to American factories and suppliers. American officials disputed Canada’s characterization of the breakdown, maintaining that a workable agreement had been available.

Although contacts between the governments eventually resumed, rebuilding negotiating momentum has proved difficult. On October 28, Reuters reported that a Canadian official familiar with the discussions described progress as limited. Carney had acknowledged a slight intensification in negotiations earlier that week, while emphasizing that Canada was not yet ready to sign an agreement. American officials, meanwhile, confirmed that discussions involving Commerce Secretary Howard Lutnick, U.S. Trade Representative Jamieson Greer, and Canadian counterparts were continuing. The competing assessments illustrate an important difference between maintaining diplomatic contact and resolving a trade dispute. Both governments have reasons to pursue an agreement, but neither has demonstrated that the outstanding disagreements have been settled.

New Tariffs Have Made the Dispute More Expensive

The economic confrontation intensified during the summer when Washington introduced additional 50% tariffs on a broad selection of Canadian products. The measures were authorized under Section 338 of the Tariff Act of 1930, a provision the Trump administration used to respond to what it described as discriminatory Canadian trade practices. Unlike many other American tariffs, the new duties can apply even when products otherwise qualify for preferential treatment under the Canada–United States–Mexico Agreement. Affected categories have included machinery, plastics, furniture, electronics, and wood and paper products, extending the dispute beyond the automotive and metal industries.

Canada responded with its own countermeasures. The federal government announced tariffs of 15%, 25%, and 50% on selected American products, covering approximately C$27.6 billion in imports. These measures took effect on September 8 and targeted industries including steel, dairy, agricultural equipment, electronics, and pulp and paper. More recently, Washington announced adjustments scheduled for October 30 that would remove certain Canadian products from the 50% tariff list while adding others. Consequently, Trump’s suggestion that Canada is treating Washington more favourably comes at a time when the underlying trade restrictions remain substantial. For affected manufacturers, changing tariff schedules create challenges involving pricing, purchasing, contracts, and long-term production planning.

Steel and Auto Tariffs Remain at the Centre of the Dispute

Steel and automobiles have become two of the most difficult issues separating Ottawa and Washington. American tariffs of up to 50% on Canadian steel and 25% on certain Canadian automobile imports have created significant pressure on manufacturers operating across the border. According to Reuters, discussions between the governments have focused on potential relief from these duties, although the scope of any eventual agreement remains uncertain. Trump has also announced plans to increase tariffs on Canadian steel and automobile imports to 50% beginning January 1, 2027. That threatened increase has added urgency to negotiations, especially for companies trying to finalize production schedules and investment decisions for the coming year.

Ontario has particularly high stakes in the outcome. Government of Canada labour-market data show that approximately 148,300 people worked in the province’s motor vehicle, body, trailer, and parts manufacturing industry in 2024. Automotive supply chains frequently involve components crossing the international border during production, making additional trade costs a concern for businesses on both sides. A supplier in Windsor may depend on orders from an American manufacturer, while a Michigan factory may rely on components produced in Ontario. Even a limited agreement reducing steel and automobile tariffs could therefore deliver meaningful relief. However, businesses would still need clarity about which products qualify, how long exemptions would last, and whether additional tariffs could return.

Trump’s $90 Billion Trade Claim Does Not Match Official U.S. Figures

During his October 29 remarks, Trump repeated a claim that the United States had lost approximately US$90 billion in trade with Canada during the previous year. The statement supported his argument that tariffs were necessary to correct an unfair economic relationship. However, official figures published by the Office of the United States Trade Representative tell a different story. The agency reported a US$48.3 billion American goods trade deficit with Canada in 2025, considerably smaller than Trump’s stated figure. The same report showed that the United States recorded a US$27.7 billion surplus in services trade with Canada. Combined goods and services trade between the two countries reached an estimated US$872.3 billion that year.

These distinctions matter because a trade deficit is not equivalent to money transferred directly from one government to another. It measures the difference between the value of imports and exports over a particular period. Americans purchase Canadian energy, vehicles, raw materials, and other products because businesses and consumers need them, while Canadians buy American machinery, agricultural goods, services, and manufactured products. The relationship is more complicated than a single deficit figure suggests. Trump’s argument reflects his longstanding belief that large trade imbalances signal an economic disadvantage for the United States. Yet evaluating that claim requires examining the full trading relationship, including services, investment, supply chains, and the benefits businesses receive from access to neighbouring markets.

The Bank of Canada Sees Rising Costs Despite Widespread Exemptions

The latest Bank of Canada assessment provides a clearer picture of how the tariff confrontation is affecting trade. In its October 28 Monetary Policy Report, the central bank estimated that the average American tariff rate on Canadian goods had climbed to 7.5%, up from 5% in July. Canada’s average tariff rate on American goods also increased, reaching 3.9%. These figures show that trade barriers have become more costly in both directions since negotiations deteriorated. However, they also reveal an important qualification: approximately 80% of Canadian merchandise exports to the United States continue to enter without tariffs. The dispute has therefore imposed substantial costs on particular industries without eliminating most tariff-free trade.

The consequences extend beyond customs payments. Companies considering new factories, equipment purchases, or hiring plans must determine whether future sales will justify their investments. When tariff policies can change quickly, that calculation becomes more difficult. Canada’s Parliamentary Budget Officer estimated in an October 20 assessment that trade measures introduced since early 2025 could leave Canadian real GDP 1.4% lower after five years than it would have been under a pre-tariff trading relationship. Under a scenario where the measures remain permanent, employment could be reduced by as many as 185,000 jobs. Those are conditional estimates, not confirmed job losses. Still, they illustrate why prolonged uncertainty matters to Canadian households as well as corporate executives.

The North American Trade Agreement Faces an Uncertain Future

The dispute is unfolding alongside uncertainty surrounding the Canada–United States–Mexico Agreement, known in Canada as CUSMA and in the United States as USMCA. The agreement entered into force on July 1, 2020, replacing the North American Free Trade Agreement and establishing common rules for much of the continent’s commerce. During the first scheduled joint review on July 1, 2026, the United States declined to extend the arrangement for another 16-year term. American officials argued that unresolved issues involving trade imbalances and the operation of the agreement needed to be addressed before Washington would approve an extension. That decision complicated Canada’s economic outlook, but it did not immediately terminate the agreement.

Under the agreement’s existing provisions, it remains in force while the governments continue their reviews, with a scheduled expiry in July 2036 unless the parties agree to extend it or circumstances change. The United States has already begun preparing for another review in 2027, including a public consultation process. Yet the continued existence of CUSMA does not guarantee that every qualifying product escapes the newer American tariffs. Certain duties imposed under Section 338 apply regardless of preferential treatment under the agreement. This creates a difficult situation for businesses that organized their operations around North American trade rules. A company may comply with the agreement’s requirements and still encounter new costs at the border, complicating the long-term planning that free-trade arrangements are intended to support.

American Businesses Are Also Feeling the Effects

Although Trump frequently presents tariffs as economic pressure directed at foreign countries, the costs can also fall on American businesses. That reality became particularly visible in Maine, where Republican Senator Susan Collins pressed administration officials to provide exemptions for certain Canadian imports. Her office highlighted difficulties facing farmers and agricultural businesses that depend on specialized Canadian equipment and packaging. Wild blueberry growers, for example, use harvesting boxes designed to work with existing processing machinery. Replacing those products with alternatives from different suppliers can involve additional expense or practical difficulties. Following discussions involving senior administration officials, Washington announced exemptions for selected Canadian products, including certain packaging materials and machinery, effective October 30.

The decision arrived during a closely contested Senate election campaign, with Collins facing Democrat Troy Jackson ahead of the November 3 midterms. It also demonstrated that tariff disputes can become politically sensitive on both sides of the border. Import duties are generally paid to American customs authorities by the importer of record, although businesses may negotiate how the costs are shared with suppliers. Companies can then absorb those expenses, raise prices, or change where they purchase products. Supporters of tariffs argue that such pressure can encourage domestic manufacturing and reduce reliance on foreign suppliers. Critics point to higher operating costs and limited alternatives for certain imports. Maine’s experience shows why Washington faces pressure to balance those competing concerns.

Carney Is Building Trade Relationships Beyond Washington

While negotiations with Washington continue, Carney’s government is placing greater emphasis on expanding Canada’s economic relationships elsewhere. Statistics Canada reported that the United States accounted for 71.7% of Canadian merchandise exports in 2025, down from 75.9% in 2024. Exports to destinations outside the United States increased by 17.2% over the same period. The figures suggest Canadian exporters have already been redirecting some business toward other markets, although the American market remains overwhelmingly important. For industries such as automotive manufacturing, where factories and suppliers have been integrated across the border for decades, changing export destinations is particularly difficult. Developing new customers, meeting different regulations, and establishing distribution networks require considerable time and investment.

Europe has become a major focus of Ottawa’s diversification strategy. Carney is hosting a Canada–European Union summit in Montreal on October 29 and 30, with discussions covering trade, technology, energy, security, and other areas of cooperation. According to the Prime Minister’s Office, bilateral trade in goods and services between Canada and the European Union was worth approximately C$178 billion in 2025, making the bloc Canada’s second-largest trading partner. Stronger European ties could create additional opportunities for Canadian exporters and investors, but they cannot quickly replace the scale or geographic advantages of the U.S. market. Ottawa is therefore pursuing two objectives simultaneously: protecting its existing North American business relationships while reducing the economic risks associated with depending so heavily on one trading partner.

A Friendlier Tone Still Falls Short of a Trade Agreement

Trump’s latest comments offer another indication that the president believes his tariff strategy has strengthened Washington’s position. There have also been signs that both governments want to find a way forward. Reuters reported on October 26 that American and Canadian officials were discussing potential relief for steel and automobile imports, with some sources suggesting a limited agreement could emerge before the November 3 elections. However, Canadian officials were still describing progress as limited two days later. The October 30 adjustments to selected tariffs demonstrate that Washington is prepared to modify individual measures, but targeted exemptions are not the same as a comprehensive settlement. Other restrictions remain, and the broader questions surrounding CUSMA have yet to be resolved.

For Canadian businesses, the most meaningful progress would involve concrete changes rather than improved political language. Lower tariffs, clearly defined exemptions, predictable implementation dates, and durable commitments would give companies more confidence to make long-term decisions. American businesses would also benefit from greater certainty about the cost and availability of Canadian products. Both governments have incentives to reach an agreement, but they continue to disagree over what an acceptable outcome should include. Trump’s claim that Canada is treating the United States “extremely nicely” captures his interpretation of the negotiations. Whether that translates into meaningful tariff relief will depend on decisions still to be made in Ottawa and Washington. Until then, the economic relationship remains under pressure, even when the diplomatic rhetoric sounds more positive.

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