Carney says US-Canada trade deal likely to include some tariffs

Carney has been cricitised for appearing to back down from Trump.

Prime Minister Mark Carney said Canada may have to accept some tariffs as part of a trade deal with the United States.

"There's not a lot of evidence right now" that the Trump administration would be willing to completely give up on the levies in any agreement, he said on Tuesday, as reported by CBC News.

Speaking to journalists ahead of a cabinet meeting in Ottawa, the prime minister said in French that all of Trump's trade negotiations have thus far included tariffs.

Last week, US President Donald Trump announced he would impose a new 35% duty on Canadian goods starting on 1 August.

Canada and the US have been in a trade war since Trump took office in January, with Trump imposing both targeted tariffs on to Canada and global levies that have been painful on certain Canadian sectors.

Canada imposed its own counter measures in response.

Carney did not say on Tuesday if he was willing to accept the levies in any deal with the US.

At the G7 summit in mid-June, he said that he would only sign an agreement "that's in Canada's best interest".

He also indicated that he would be willing to impose further counter-tariffs if Ottawa and Washington could not strike a deal.

In addition to the latest threatened 35% tariff on Canada - an increase from the current 25%, which includes significant exemptions - Trump has imposed a global 50% tariff on aluminium and steel imports, and a 25% tariff on all cars and trucks not built in the US.

The US president also recently announced a 50% tariff on copper imports, scheduled to take effect next month.

Canada sells about three-quarters of its goods to the US, and is an auto manufacturing hub and a major supplier of metals, making the US tariffs especially damaging to those sectors.

Still, much of the cross-border trade between the US, Canada and Mexico is exempt from additional levies under the US-Mexico-Canada Agreement (Cusma).

US media have reported that the agreement remains in place for now.

A recent report from the Royal Bank of Canada stated that Canada's exports to the US fell since April, but compliance with Cusma has risen.

Around 91% of Canadian exports to the US crossed the border duty-free, the bank said, citing data from the US Census Bureau.

In an interview with the BBC on Monday, Trump said the US was "negotiating with Canada right now" and it was going to "work out very well".