Trump Tariff (3)38 ‘special’ could be ‘beginning of the end’

Carney and Greer’s intensity helps answer ‘Churchill Questions’.

Written by Jack Hughes, Senior Vice President, Planning and Operations, Business Council of Canada.

When the Trump Administration revealed it was prepared to impose new 50% Section 338 tariffs on Canada late Monday afternoon, trade observers began to ask themselves the ‘Churchill’ questions:

Is this the end? Is this the beginning of the end? Is this, perhaps, the end of the beginning?

By the end of the week, we had a much clearer sense of the answer and even, perhaps, more reason for optimism than we’ve had in some time.

Early Tuesday morning, within hours of the 338 tariffs first being floated, Prime Minister Mark Carney had a phone call with U.S. President Donald Trump during which they both agreed to intensify negotiations in the coming weeks. This confirmed for many observers that the tariff announcement was both intended and interpreted as a tactical manoeuvre to bring the two countries back to the table – something Carney would later confirm himself.

Importantly, Carney used the opportunity to remind Canadians his government has made “a series of comprehensive and detailed proposals about how to modernize CUSMA [the Canada-United States-Mexico Agreement], recognizing the transition that the U.S. is underway in all its trading relationships, including Canada and Mexico.” This reminder served to reiterate Canada’s position that a ‘Fortress North America’ remains a possibility.

On Wednesday, Ambassador Jamieson Greer, the U.S. Trade Representative, told the U.S. Senate Finance Committee that he was “hopeful that by the end of the year we can have at least options for President Trump and the leaders of Canada and/or Mexico.” He then quickly added, “I would love to have, between now and the end of the year, at least some arrangements; one with Canada, one with Mexico.” [emphasis added]

These agreements, which Greer has previously termed ‘country-specific protocols,’ would involve resolving bilateral trade irritants in exchange for tariff relief. The review of CUSMA/USMCA could, he implied, potentially stretch into early 2027.

More specifically, he testified “issues that are really important like rules of origin…that take a little more time to have further discussion of that, including with Congress, in the following year.”

Thursday afternoon, at the conclusion of the First Ministers’ Meeting in Charlottetown, the Prime Minister outlined areas of alignment with Greer’s testimony.

First, though, in response to a reporter’s question, he acknowledged the 30-day 338 tariff deadline created a ‘meaningful opportunity to approach some sort of endgame with the United States’ – noting the U.S. ‘normally’ negotiates with an ‘outsized tariff’ associated with a deadline.

With respect to what could happen at the conclusion of the 30-day period, Carney said it depended on the outcome of intensified negotiations but that all options are on the table. He chose his words carefully, clarifying any potential retaliation would be considered if U.S. tariffs were imposed in 30 days, not if no agreement was reached in 30 days. This suggests he sees a scenario in which the U.S. extends the deadline if talks are progressing.

The most important and informative answer was the Prime Minister’s last on the subject, in which he endorsed the concept Greer had outlined to the U.S. Senate. Carney said it was a “sensible approach” (he actually made a ‘two-thumbs up’ gesture) to have separate interim agreements with Canada and Mexico – reflecting the different bilateral trade issues that exist with the U.S. – but that are consistent with the structure of the USMCA.

Carney was even aligned on sequencing, saying “it is possible, and entirely consistent with what Ambassador Greer said, that there’s an agreement with Canada, an agreement with Mexico…I’m just telling you the process, that addresses some of these bigger issues but there’s also a series of…technical issues…or trade irritants, as the Americans would call them, with respect to CUSMA – and that process extends towards the end of the year.”

To summarize, Greer and Carney displayed a common understanding of the scale, scope and sequencing of the intensified negotiations. The goal is not just to address and avoid the Section 338 tariffs announced on Monday. There is an agreement that the sensible approach is interim bilateral agreements in the nearer-term that are consistent with the USMCA, and then medium-term – end of year or early next year – trilateral technical issues.

All of this is worth recounting in detail because it helps us answer the Churchill questions.

Is this the end? No. There’s much to be discussed and decided in the weeks ahead.

Is this the end of the beginning? As the tariff dispute began in November 2024, one has to hope we’re now well past the beginning.

Is this, perhaps, the beginning of the end? Carney and Greer gave us reason to hope we may be closer to an endgame than we were a week ago.