Prime Minister Mark Carney returned to Ottawa this week facing a political storm and mounting economic uncertainty after his high-profile visit to Washington failed to secure relief from a raft of punishing U.S. tariffs. The visit, which included a much-publicized Oval Office meeting with President Donald Trump, a working lunch, and dinner with Vice President J.D. Vance, was intended to ease tensions and broker a breakthrough on the tariffs that are biting into Canada’s steel, aluminum, automobile, and softwood lumber sectors. Instead, Carney arrived home with little to show for his efforts—except for a promise that negotiations would continue, and a fresh set of attacks from the opposition at home.
According to The Globe and Mail, the tariffs in question are substantial: 50% on Canadian steel and aluminum, 25% on automobiles (with a carve-out for parts manufactured in the U.S.), and, as of October 14, a steep 45% tariff on softwood lumber exports from Canada. These measures, imposed by the Trump administration, have become a major flashpoint in Canada-U.S. relations, threatening not only Canadian industries but also the broader economic partnership between the two countries.
"Intensive negotiations are in train right now for the sectors of steel and aluminum and in parallel conversations on forest products and automobiles," Carney told reporters at a news conference in Ottawa on October 10. He acknowledged the talks with the Trump administration were at a "critical stage," with both sides eager to reach sector-specific agreements that could persist even if the United States-Mexico-Canada Agreement (USMCA) is revised in the coming year.
Carney’s government is under intense pressure to deliver. The Prime Minister, who campaigned on a promise to defend the Canadian economy against U.S. protectionism, is now being accused by Conservative leader Pierre Poilievre of failing to secure a tariff deal and reneging on his pledge to forge a new economic and security relationship with the United States. Poilievre’s criticism has resonated with the Conservative base, but, as noted by policy columnist Don Newman in The Globe and Mail, it remains to be seen whether it will sway the crucial bloc of swing voters who typically decide Canadian elections.
Despite the lack of immediate progress, Canadian officials are not giving up. Dominic LeBlanc, the minister responsible for U.S. trade, stayed behind in Washington after Carney’s visit to continue negotiations with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, alongside Canada’s ambassador to the U.S., Kristen Hillman. LeBlanc returned to Ottawa by the end of the week, announcing via social media that talks would resume over the weekend and that he expected to return to Washington early the following week. According to a source cited by The Globe and Mail, the discussions have been “substantive” and are being conducted under a strict cone of silence.
At the heart of the standoff is the looming renewal of the USMCA, the trilateral trade pact that allows about 85% of Canadian goods to flow duty-free into the United States. Ottawa is keen to avoid a scenario where Canadian industries are hit with further penalties when the agreement comes up for review next year. “We are negotiating specific sectoral deals with them, which would likely persist with a revised USMCA,” Carney explained. “It means that this is not one simple trade deal which will resolve all the issues, which is why we are focused on retaining the huge advantage that we have relative to the rest of the world.”
But the trade talks are only one piece of a much larger puzzle. Carney also revealed that the discussions with the Trump administration have expanded to include major energy projects—most notably, the possible revival of the Keystone XL pipeline, which would carry Alberta oil to Texas and was cancelled by former President Joe Biden. Carney confirmed that his government has held talks with potential backers of Keystone, though he declined to specify which companies are involved. “This government believes in nation-building projects, in both clean and conventional energy,” Carney said. He added that any new pipeline to the West Coast would require a viable corporate sponsor, Indigenous buy-in, and robust climate protections.
The prospect of a second pipeline from Alberta to the West Coast has ignited debate within Carney’s own cabinet and among provincial leaders. Natural Resources Minister Tim Hodgson told a Senate committee that such a project would require the support of British Columbia Premier David Eby, who remains staunchly opposed. Alberta Premier Danielle Smith, on the other hand, is investing $14 million in the initial planning for a pipeline and hopes to secure a memorandum of understanding with Ottawa by mid-November. The project would then need to clear federal regulatory hurdles early next year. Conservative leader Poilievre, for his part, dismissed the notion of a “provincial veto,” insisting, “The courts have ruled on this question again and again. When it comes to interprovincial pipelines, it’s the federal government that has the sole power to decide. Full stop.”
Meanwhile, Carney is also considering whether to lift the industrial emissions cap and a tanker ban on the Pacific Coast—measures enacted by the previous Liberal government—if greenhouse gas emissions can be reduced through carbon capture and storage. The tanker ban, in place since 2019, prevents large oil tankers from docking at ports on British Columbia’s north coast, a policy that has been fiercely defended by environmentalists and some Indigenous groups.
On the defense front, the political and economic uncertainty has cast a shadow over Canada’s commitment to purchase approximately 80 F-35 jet fighters, a deal that is now under review. There is speculation, as reported by The Globe and Mail, that Canada may accept the first tranche of jets as required by contract but could switch to a European supplier for the remainder, a move that would likely provoke a strong response from Washington.
Despite these challenges, Carney insists that Canada has some leverage in the ongoing negotiations, particularly in the areas of energy and critical minerals. But the stakes are high. As Don Newman observed, “The tariffs we are now facing would seem puny in comparison to what we would face if the deal were terminated. Other penalties and punishments would certainly follow.” The Prime Minister, for his part, has emphasized the importance of maintaining strong economic ties with the United States, noting that Canada is the second-largest foreign investor in the U.S. and would be prepared to invest “trillions” more if a favorable deal can be reached.
Still, the reality is that both Carney and Poilievre are grappling with a mercurial American president whose negotiating style is unpredictable and often theatrical. Trump, who has transformed the traditional Oval Office photo-op into what one columnist described as a “gold-plated fireside monologue,” seems determined to keep Canada on the back foot while projecting strength to his domestic audience. For Canadian leaders, navigating these turbulent waters requires not just diplomatic skill, but also a willingness to adapt to rapidly shifting circumstances.
As negotiations continue behind closed doors and the clock ticks down to the USMCA’s renewal, the fate of Canada’s key industries—and the broader relationship with its largest trading partner—hangs in the balance. The coming weeks will test the resolve of both governments and could reshape the cross-border economic landscape for years to come.
