Canadian PM says anti-tariff ad featuring Ronald Reagan ‘offended’ Trump, who has since cut off trade talks with Canada.
Published On 1 Nov 20251 Nov 2025
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Canada’s Prime Minister Mark Carney says he apologised to Donald Trump over an anti-tariff advertisement that has drawn the United States president’s ire and disrupted trade talks between the two countries.
During a news conference in South Korea at the end of the Asia-Pacific Economic Cooperation (APEC) summit on Saturday, Carney stressed that he is responsible for negotiating Canada’s ties with its largest trading partner.
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“I did apologise to the president. The president was offended,” the prime minister said of the advertisement, which was produced by the Canadian province of Ontario.
“I’m the one who’s responsible, in my role as prime minister, for our relationship with the president of the United States, and the federal government is responsible for the foreign relationship with the US government,” Carney added.
“So, things happen – we take the good with the bad – and I apologised.”
The US-Canada relationship has deteriorated over the past year amid Trump’s global tariffs push, which saw him impose steep duties on his country’s northern neighbour.
Ontario’s commercial, which featured a 1980s speech by former US President Ronald Reagan in which Reagan said tariffs can lead to “fierce trade wars” and unemployment, worsened that already tense situation.
The Trump administration suspended trade talks with Canada over the advertisement, which Washington has claimed misrepresented Reagan’s views and sought to unfairly influence a looming US Supreme Court decision on Trump’s tariff policy.
Last weekend, the US government also announced an additional 10 percent levy on Canadian goods after the commercial was not immediately pulled from broadcasts in the US.
On Friday, Trump told reporters that he did not plan to resume trade negotiations with Canada despite getting an apology from Carney.
“I have a very good relationship, I like him a lot – but you know, what they did was wrong,” the US president said.
“He [Carney] was very nice, he apologised for what they did with the commercial because it was a false commercial. It was the exact opposite; Ronald Reagan loved tariffs and they tried to make it look the other way.”
The Ontario commercial used real excerpts of Reagan’s speech, but the statements were presented in a different order than how they were originally delivered.
The US and Canada, which share the world’s longest land border, traded $761.8bn worth of goods last year, according to the Office of the US Trade Representative.
Relations nosedived in 2018 after Canada arrested a senior Huawei executive and have remained rocky ever since.
The leaders of China and Canada have taken a step towards mending the long-fractured ties between their countries with a meeting in South Korea during the Asia-Pacific Economic Summit.
Chinese President Xi Jinping and Canadian Prime Minister Mark Carney met on Friday and called for improving ties in a pragmatic and constructive manner, according to both sides.
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“The leaders agreed that their meeting marked a turning point in the bilateral relationship,” a Canadian statement said.
Xi was quoted as saying that relations are showing signs of recovery, thanks to the joint efforts of both sides.
“We are willing to work together with Canada to take this meeting as an opportunity to promote the return of bilateral relations to a healthy, stable and sustainable track as soon as possible,” Xi said, according to an official report distributed by China’s state media.
Carney, who became prime minister in March, accepted an invitation from Xi to visit China, the Canadian statement said, without specifying any date.
Carney also later told reporters he was “very pleased” with the outcome.
“We now have a turning point in the relationship, a turning point that creates opportunities for Canadian families, for Canadian businesses and Canadian workers, and also creates a path to address current issues,” he said.
“The meeting signals a change in tone and an openness to relations at the highest levels, but this is not a return to strategic partnership,” said Vina Nadjibulla, vice president of the Asia Pacific Foundation of Canada. “Canada needs to proceed with caution because there’s nothing to suggest the Chinese Communist Party’s actions have changed since the prime minister named China as a foreign security threat.”
She said Carney should keep talking with Chinese leaders but stay mindful of China’s threats to Canada’s security interests, including its efforts to play a greater role in Arctic affairs.
Shaky relations
Relations took a nosedive in late 2018 after Canadian authorities arrested a senior executive of Chinese tech giant Huawei as part of its extradition agreement with the United States. China then arrested two Canadian citizens and charged them with espionage.
Ties did not improve much even after the 2021 release of the two Canadians, Michael Kovrig and Michael Spavor, and the Chinese executive, Meng Wanzhou, who is the daughter of Huawei’s founder.
More recently, relations have been shaken by Canada’s decision to levy a 100 percent tariff on electric vehicles (EVs) from China in 2024 and a 25 percent tariff on steel and aluminium. China retaliated with its own steep tariffs on canola, seafood and pork, and has offered to remove some of those import taxes if Canada drops the EV tariff.
Canada made the move last in tandem with the US.
The Canadian statement said that both leaders directed their officials to move quickly to resolve trade issues and irritants and discussed solutions for specific products such as EVs, canola and seafood.
Xi called for expanding “pragmatic” cooperation in areas such as the economy, trade and energy. Both Canada and China have been hit by tariffs imposed by US President Donald Trump.
The attempt at rapprochement comes as Carney looks to diversify Canada’s trade away from the US and as Trump says he plans to raise tariffs on imports of Canadian goods by an extra 10 percent. Canada’s free trade agreement with the US is up for review.
Earlier on Friday, Carney told a business event that the world of rules-based liberalised trade and investment had passed, adding that Canada aimed to double its non-US exports over the next decade.
Nadjibulla said China should not be viewed as the solution to Canada’s issues with the US, however.
“We should not diversify away from the US and go deeper into China,” she said. “Canada’s overdependence on both the US and China has been shown to be a vulnerability we cannot afford.”
Weekly insights and analysis on the latest developments in military technology, strategy, and foreign policy.
Canada is still in the process of reviewing its future fighter fleet, officials have confirmed. However, with a firm commitment to buy 16 F-35As, it’s looking increasingly difficult to make the case for Ottawa switching to a different manufacturer to complete the full replacement of its aging CF-18 Hornets. Canada currently has around 75 CF-18A/B+ jets and has also added 18 former Royal Australian Air Force (RAAF) F/A-18A/Bs, plus seven more as spares, to help bolster its fleet.
Speaking in front of a House of Commons accounts committee yesterday, Canada’s Deputy Minister of Defense Stefani Beck said that it was “full steam ahead” for the country’s F-35 program.
An F-35A from the U.S. Air Force Lightning II Demonstration Team prepares to launch during the Bagotville International Air Show in Quebec, Canada, June 22, 2019. U.S. Air Force/Staff Sgt. Jensen Stidham
“What we have as direction is to continue with the contract… with the arrangements that we have in place until we hear otherwise,” Beck told lawmakers. She added that the Canadian Ministry of Defense was “focused on making sure we’ve got the infrastructure, the pilots, the training in place for the arrival of those F-35s.”
That makes sense, considering that Canada has already committed to buying 16 F-35s. Of these, four have already been paid for in full, while parts for eight others have also been purchased. The first Canadian F-35s are expected to be delivered for training at Luke Air Force Base, Arizona, next year.
Importantly, however, as Beck referred to, the government is still keeping its options open for what comes after those 16 jets.
Infographic outlining the key features of Canada’s future F-35As. RCAF
Back in 2023, Canada’s Liberal government announced plans to buy 88 F-35s, a decision that appeared to bring closure to what had already been a very protracted process. You can read about this here.
The first F-35s were planned to arrive in Canada in 2028, with full operational capability to be achieved in 2032–34.
However, amid growing trade tensions with the United States, Liberal Prime Minister Mark Carney launched a review of the acquisition program shortly after taking office in the spring of this year, with a deadline for the decision on that due in the late summer of this year.
Prime Minister of Canada Mark Carney speaks to the press during the NATO summit on June 25, 2025, in The Hague, Netherlands. Photo by Pierre Crom/Getty Images Pierre Crom
As it stands, Canada-U.S. relations are at a low.
Yesterday, with Carney visiting Washington, U.S. President Donald Trump said the United States and Canada have “natural conflict” on trade. For his part, Carney is under considerable pressure domestically to reach an agreement on lower tariffs.
This is all part of the fallout from events in August, when Trump increased tariffs on many Canadian goods to 35 percent, with Canada then retaliating with its own tariffs on U.S. exports.
President Trump and I know that there are areas where our nations can compete — and areas where we will be stronger together.
Meanwhile, the Canadian tri-party public accounts committee that met yesterday is studying the latest auditor general’s report on the rising cost of the F-35 program.
Back in 2019, the cost of buying the planned 88 F-35s was put at $19 billion. Now it has ballooned to $27.7 billion, not including weapons and infrastructure.
Some of the additional costs are a result of changing demands from the U.S. government’s F-35 Joint Program Office (JPO). For example, the JPO has called for higher levels of security at infrastructure being built in Canada, including hangars. The infrastructure factor is a major one for the F-35 and its unique requirements that differ dramatically from the Hornet.
The RCAF will have two F-35 main operating bases, at Canadian Forces Base (CFB) Cold Lake in Alberta, and CFB Bagotville in Quebec.
The choice to be made is whether to stick with the 88 F-35s despite the extra costs, or to cut the order and go with a ‘split buy’ — making up the numbers by buying another fighter type.
Other aircraft that have already been offered to Canada include Saab’s Gripen E, which, together with the F-35, was the last contender in the competition. The Swedish company had offered to build the jet in Canada, in an effort to secure support for its bid.
Saab Gripen E. Saab
Two other European candidates, the Eurofighter Typhoon and the Dassault Rafale, both left the competition before it had begun, complaining that the process unfairly favored U.S. companies.
For a while, there had also been plans to buy a smaller number of F/A-18E/F Super Hornets as “interim” fighter jets, instead of the F-35. However, an earlier trade dispute between the Canadian government and Boeing led to the F/A-18E/F being kicked out of the competition in 2021.
A U.S. Navy F/A-18E takes off from Gowen Field, Boise, Idaho, April 25, 2019, during a joint training exercise with the Idaho Air National Guard. U.S. Air National Guard photo by Ryan White A VFA-105 ‘Gunslingers’ F/A-18E takes off on a training sortie. (U.S. Air National Guard photo by Ryan White)
Bill Blair, who was the defense minister when the review of the F-35 buy was launched in March, suggested some advantages of a mixed fleet, saying it would give the RCAF more options to handle different types of threats.
“What happens if you have to persist in that space for months and months and years? The tool that you use, is it the right tool to do that job?” Blair said. “We need to have a whole wide range of capability sets to deal with all the eventualities that we could face.”
Pushing forward with the full F-35 buy has the support of Conservatives sitting on the accounts committee.
Meanwhile, the U.S. Ambassador to Canada, Pete Hoekstra, has pushed back on the idea of a mixed RCAF fighter fleet, saying that it will make interoperability with North American Aerospace Defense Command (NORAD) more difficult if Ottawa were to buy a European combat jet.
A Canadian NORAD Region CF-18 Hornet practices intercept and escort procedures alongside a U.S. Air Force B-52H bomber during Exercise VIGILANT SHIELD 17-1, June 15-16, 2017. USAF
For their part, senior Royal Canadian Air Force (RCAF) officers have been more circumspect, cognizant of the fact that the future of the fighter fleet lies with the government’s forthcoming decision.
When asked about the challenges of operating a mixed fighter fleet, the RCAF’s commander, Lt. Gen. Jamie Speiser-Blanchet, noted that the force would have to do this anyway, with the CF-18 remaining in use until the early 2030s, while the F-35 is in the process of being introduced.
A CFB Bagotville-based CF-18B Hornet. RCAF
However, she did say that a mixed fighter fleet, longer term, would bring additional costs and complexities.
“It would duplicate a certain amount of infrastructure and training,” she explained.
Perhaps more significantly, Speiser-Blanchet pointed to the growing threat provided by Russia and China, Canada’s two main adversaries, both of which now operate fleets of fifth-generation fighters (although Russia’s is notably smaller).
Lt. Gen. Jamie Speiser-Blanchet assumed command of the Royal Canadian Air Force during a change of command ceremony in July of this year. RCAF
As it stands, the only realistic options to bulk out a potential RCAF mixed fighter fleet that also includes F-35s are fourth-generation or so-called ‘generation 4.5 fighters.’
“Both China and Russia have fifth-generation fighter aircraft and fifth-generation missiles that are able to go at much greater speeds and with much more that are holding Western allies at risk at this moment in time,” the RCAF boss said. Concerns around the expanding performance, and especially the long range, of adversary missiles, are something TWZhas discussed on many occasions in the past.
An RCAF CF-18A+ Hornet fires an AIM-120C AMRAAM. RCAF
Interviewed earlier this week, Stephen Fuhr, Canada’s secretary of state for defense procurement, appeared to state that the country wasn’t trying to move away from the F-35.
“I don’t think that’s the direction we’re heading,” Fuhr said in an interview with CBC. “But there’ll be a decision, and we’ll make it when we’re ready.”
Subsequently, a spokesperson for Fuhr clarified that he was referring to the future of the 16 jets under contract, not the entire fleet.
“Canada is contractually obligated to 16 aircraft, which are in various stages of production with the manufacturer. A decision on the full program is currently under review,” the spokesperson said.
Once again, this confirmed that the future of the 88-aircraft F-35 buy wasn’t secure.
The problem for anyone backing the idea of a mixed fighter fleet is that the longer the decision on that is delayed, the harder it will be.
As mentioned before, Canada is already paying for at least some F-35s and is due to get its hands on its first aircraft next year. Infrastructure programs may be running over budget and behind schedule, but they have also consumed considerable funds. Then there is the fact that Canada’s industry also has a significant degree of involvement in the Joint Strike Fighter program.
An infographic showing Canadian industrial participation in the F-35 program. Lockheed Martin
In some cases, there could be cost-benefit arguments in having a mixed fighter fleet, as well as the important factor of not relying entirely upon one source of this type of combat equipment.
But as Canada and the RCAF become more deeply intertwined with the F-35, the arguments for buying some kind of alternative fighter to bulk out the fleet — in a cost-efficient way — become increasingly hard to justify.
Canada’s Prime Minister Mark Carney is on his second visit to the White House in five months as he deals with increasing pressure to address US tariffs on steel, autos and other goods that are hurting Canada’s economy.
Carney and United States President Donald Trump met at the White House on Tuesday.
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“From the beginning, I liked him, and we’ve had a good relationship,” Trump told reporters in the Oval Office, sitting next to Carney.
“We have natural conflict. We also have mutual love … you know we have great love for each other,” he added, saying the two men would discuss tariffs including potentially lowering tariffs on key Canadian sectors as part of efforts to ease trade tensions between Washington and Ottawa.
More than 77 percent of Canada’s exports go to the US.
A Canadian government official and several analysts played down the chances of an imminent trade deal with Trump and said the mere fact that discussions are continuing should be considered a success for Carney.
Among the topics up for discussion are trade and the United States-Mexico-Canada Agreement (USMCA), which is critical to Canada’s economy and is up for a review next year.
Trump said he was willing to revisit the free trade agreement, which was enacted during his first term, or seek “different deals.”
“We could renegotiate it, and that would be good, or we can just do different deals,” he said. “We’re allowed to do different deals.”
Trump exhibited a fondness for Carney, something he didn’t display toward Carney’s predecessor, Justin Trudeau. He described Carney as a “world-class leader” and said he’s a tough negotiator.
The prime minister last visited the Oval Office in May, when he bluntly told Trump that Canada would never be for sale in response to Trump’s repeated threat to purchase or annex Canada.
Since then, the prime minister has made numerous concessions to Canada’s biggest trading partner, including dropping some counter tariffs and scrapping a digital services tax aimed at US tech companies.
Carney’s office has said the working visit will focus on forging a new economic and security relationship with the US.
“In areas where we compete, we have to come to an agreement that works, ” Carney said.
White House spokeswoman Karoline Leavitt said on Monday: “I’m sure trade will be a topic of discussion … and all of the other issues that are facing both Canada and the United States.”
While the majority of Canada’s exports are entering the US tariff-free under the USMCA, tariffs have pummeled Canada’s steel, aluminium and auto sectors and a number of small businesses.
“The reality is that right now, Canadian products have among the lowest tariff rate,” said Jonathan Kalles, a former adviser to Carney’s predecessor, Trudeau. “You don’t want to poke the bear when things could be much worse,” he said, adding that any meeting with Trump is a calculated risk.
“Carney will probably get a better deal through private negotiations, not the pomp and ceremony of going to the White House,” he said.
Growing pressure
Carney won an election in April promising to be tough with Trump and secure a new economic relationship with the US.
Shachi Kurl, president of the Angus Reid Institute, said polls show Canadians have largely been willing to give Carney time to deal with Trump.
“But that amount of time is finite,” Kurl said, noting pressure may build with job losses mounting and economic growth hobbled by US tariffs.
Canada’s opposition leader, Pierre Poilievre, has criticised Carney’s approach to Trump, noting the prime minister’s earlier pledge to “negotiate a win” by July 21. He said on Monday that it did not look like Carney would accomplish much in the trip.
Dominic LeBlanc, the minister responsible for Canada-US trade, said in response that Canada has work to do on sectoral tariffs.
“Was the leader of the opposition suggesting that if the president of the United States invites us to go to Washington for a meeting and a working lunch, we should have just said ‘no’ and hung the phone up?” LeBlanc said in Parliament.
Asa McKercher, a specialist in Canada-US relations at St Francis Xavier University, said Carney’s meeting with Trump would be a success if there is any recognition that Canada has moved to address some of Trump’s persistent grievances.
“Carney has just set up this new defence agency and boosted military spending, so it would be great if Trump could reduce some of those sectoral tariffs on autos,” McKercher said, citing Trump’s past complaint that Canada is a “military free rider”.
Despite tensions between the two, Canada might need a helping hand from Tesla, and could pay dearly for it.
Maybe you can call Canada and Tesla(TSLA 3.94%) frenemies. The tension between the two entities has existed since Tesla allegedly manipulated Canada’s electric vehicle (EV) subsidy program. While Tesla believes it to be a misunderstanding and was later cleared of wrongdoing, it added to the political tension between the two nations, and added to the Canadian resentment toward Tesla CEO Elon Musk for then supporting the Trump administration.
It was a little messy, so it’s even more entertaining now that Canada might actually put more dollars in the pockets of Tesla. Here’s the situation.
What’s going on
Canadian automakers have been raising red flags and could be in for a bumpy ride if Canada’s electric vehicle (EV) mandate is enforced as currently described and EV sales don’t accelerate. Essentially, Canada’s EV sales mandate requires an automaker to ensure a certain percentage of new cars, SUVs, and light-duty trucks sold are zero-emission vehicles including hybrids.
Originally the mandate was supposed to start at 20% in 2026, but now it will begin in 2027 with the caveat that the initial target will be a challenging 27%. The percentage will rise steadily every year until 2035 when all new vehicle sales are intended to be EVs. For context, EV sales in Canada nearly reached 15% of total sales in 2024, but that was when the government was offering consumer rebates up to $5,000.
Once funding ran dry for the rebate in January, sales took a mighty plunge. The most recent data from Statistics Canada shows EV sales generated 7.7% of all new vehicle sales in July — a far cry from what’s going to be required to meet standards on average.
Image source: Tesla.
What are Canadian autos to do?
As most investors following the industry know, there’s a way to comply with these mandates by purchasing zero-emission credits from companies that have a surplus. Companies such as Tesla that only sell EVs and have no gasoline vehicle sales to offset, can simply sell their credits to needy gasoline-heavy automakers and pocket the money — it’s great business for pure EV makers. Zero-emission credit sales were instrumental during Tesla’s early years and still have been a major contributor to its financials.
The good news for Tesla is that Canadian automakers may not have an option other than to begrudgingly purchase from Tesla despite the ruffled feathers between the two entities. According to Canadian Vehicle Manufacturers’ Association president Brian Kingston, with 2026 models already being purchased, Tesla would be one — if not the only — automaker with a surplus of credits on hand to sell to other companies.
It also gets a little more complicated because as the targets become more challenging there will be more demand and less supply of these credits available, forcing some automakers to buy them ahead of time to be utilized when necessary. According to Kingston, estimates show over $1 billion has already been committed to this and could cost the Canadian industry more than $3 billion by 2030.
What it all means
Zero-emission credits have been a huge business for Tesla, and the company has generated billions and billions of dollars over the years selling them to needy automakers. Unfortunately for Tesla and other EV makers, changing policy in the U.S. has erased the need for these credits in the states.
In fact, Tesla was estimated to generate $3 billion from credit revenue in 2025 alone before the policy change knocked that estimate down by 40%. Tesla’s credit revenue is expected to plunge even further next year to $595 million before becoming irrelevant in 2027.
For investors, an extremely valuable Tesla revenue stream is about to dry up, unless Canada’s mandate stays as written. While it wouldn’t generate near the revenue the U.S. credit situation has, it would still be a welcome development as credit revenue in the U.S. fades rapidly — and Tesla could sure use a small win right now.
Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The 2025 Alaska meeting has served as a wake-up call, prompting Canada to undergo a strategic realignment in its foreign policy with a particular focus on strengthening ties with Europe and the Asia-Pacific region.
On Ukraine’s Independence Day, Canada’s Prime Minister did more than just visit Kyiv. His presence sent a message of genuine solidarity and signalled to the world that Canada may be ready to move beyond symbolic gestures into the space of real security commitments.
To address the question, why is Canada recalibrating its global posture?
It is crucial to recognize that Trump’s meeting with Zelensky at the White House served as a stark reminder of the conditional and fragile nature of American support.
If Ukraine, a nation actively resisting military aggression, can be subjected to strategic indifference, then there is little assurance that Canada will be immune to similar treatment. The shifting tenor in Washington, illustrated by former President Trump’s imposition of tariffs and his dismissive rhetoric regarding Canadian sovereignty, signals a deeper recalibration in U.S. foreign policy. For Ottawa, the message is clear: it can no longer rely on the stability of its relationship with Washington. This shift threatens all U.S.allies, including Canada and European countries that have relied on the U.S.security umbrella for decades.
Alongside his visit, Prime Minister Mark Carney expressed support for Ukraine’s call for long-term security guarantees as part of any future peace deal with Russia. That support includes the possibility of deploying Canadian troops to Ukraine. Prime Minister Mark Carney’s words carry the weight of his intent:
The statement was not simply vague diplomatic language, but it has given a clear message to the hesitant European capitals, and NATO strategists in Brussels now have a concrete framework to build around. Berlin now has political cover to move forward, which has been cautious about postwar commitments. Paris, which has talked about troops but wavered on details, now has an ally willing to share the burden. London, navigating domestic pressure, has now been offered a lifeline.
For Moscow, the message is unambiguous: Western resolve will not be undermined by time and political maneuvering. Putin’s calculation has always been that Western resolve would crack, that domestic politics would eventually force Ukraine’s allies to abandon ship. But now the tables have turned, and a peacekeeping force backed by Canada, Britain, and France—with German support—isn’t a negotiating position Putin can simply outlast. It’s a permanent commitment he will be forced to reckon with.
“We are all working to ensure that the end of this war would mean the guarantee
of peace for Ukraine, so that neither war nor the threat of war is left for our
children to inherit,” Zelenskyy told a crowd of dignitaries.
He further added that he wants future security guarantees as part of a potential peace deal to be as close as possible to NATO’s Article 5, which considers an attack on one member state as an attack against all.
The Canadian prime minister, Mark Carney, and President Zelensky formalized a
$680 million drone co-production agreement, scheduled to commence imminently. Canada also joined the PURL initiative, a multilateral fund mechanism enhancing Ukraine’s access to advanced weaponry, coordinated by the U.S.
So far, Canada has pledged:
$680 million for drone co-production.
$500 million for the PURL initiative
$680 million for drone co-production
$320 million for armored vehicles and other resources
Readiness to join a postwar peacekeeping force
His leadership hasn’t stopped there. As holder of the G7 presidency, Canadian Prime Minister Mark Carney announced these measures during the 2025 G7 Summit held in Kananaskis, Alberta, Canada.
“We are working with international partners to strengthen security commitments to Ukraine. While hosting the G7 Summit, Prime Minister Mark Carney announced $2 billion in additional military assistance for Ukraine, as well as the disbursement of a
This marks a turning point, with Canada emerging as a key leader in NATO’s collective response, especially at a time when traditional allies have backed off or shown hesitation due to diplomatic pressures. The combination of military aid and
Economic reconstruction funding reflects a mature and comprehensive approach, underscoring Canada’s recognition that lasting peace depends on both strong defense and sustainable development. Moreover, Canada’s strategy aims to reduce reliance on U.S. markets without provoking retaliation—a delicate but necessary balancing act in today’s complex geopolitical landscape.
On August 24th, Carney changed the course. Had he not, Canada would still be making trips to Washington years from now, offering empty platitudes, clinging to diplomacy on thin ice, and watching its future partner in Europe be crushed by imperial aggression. Canada has realized it must help Europe, help Ukraine, and prove it can be counted on.
The arithmetic is brutal for Moscow. With over $20 billion already locked in for 2026 from just three nations, and Europe’s aid machinery now running independently of Washington’s whims, Putin faces a grim calculus. As Europe and Canada lead the charge, the West’s resolve hardens—and for Putin, the future looks increasingly untenable.
WASHINGTON — President Trump said Canada’s announcement that it will recognize a Palestinian state “will make it very hard” for the U.S. to reach a trade agreement with its northern neighbor.
Trump’s threat, posted in the early hours Thursday on his social media network, is the latest way he has sought to use his trade war to coerce countries on unrelated issues and is a swing from the ambivalence he has expressed about other countries making such a move.
The Republican president said this week that he didn’t mind British Prime Minister Keir Starmer taking a position on the issue of formally recognizing Palestinian statehood. And last week he said that French President Emmanuel Macron’s similar move was “not going to change anything.”
But Trump, who has heckled Canada for months and suggested it should become the 51st U.S. state, indicated on Thursday that Prime Minister Mark Carney’s similar recognition would become leverage ahead of a deadline he set in trade talks.
“Wow! Canada has just announced that it is backing statehood for Palestine,” Trump said in his Truth Social post. “That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!”
Trump has threatened to impose a 35% tariff on Canada if no deal is reached by Friday, when he’s said he will levy tariffs against goods from dozens of countries if they don’t reach agreements with the United States.
Some imports from Canada are still protected by the 2020 United States-Mexico-Canada Agreement, which is up for renegotiation next year.
Carney’s announcement Wednesday that Canada would recognize a Palestinian state in September comes amid a broader global shift against Israel’s policies in Gaza.
Though Trump this week said he was “not going to take a position” on recognizing a Palestinian state, he later said that such a move would be rewarding Hamas, whose surprise Oct. 7, 2023, attack on Israel prompted a declaration of war and a massive military retaliation from Israeli Prime Minister Benjamin Netanyahu.
Trump’s new cudgel against Canada comes after he moved to impose steep tariffs on Brazil because it indicted its former president Jair Bolsonaro, a Trump ally who, like the U.S. president, has faced criminal charges for attempting to overturn the results of his election loss.
Trump signed an executive order Wednesday to impose his threatened 50% tariffs on Brazil, setting a legal rationale that Brazil’s policies and criminal prosecution of Bolsonaro constitute an economic emergency under a 1977 law.
Trump had threatened the tariffs July 9 in a letter to President Luiz Inacio Lula da Silva. The legal basis of that threat was an earlier executive order premised on trade imbalances being a threat to the U.S. economy. But the U.S. ran a $6.8-billion trade surplus last year with Brazil, according to the U.S. Census Bureau.
A statement by the White House said Brazil’s judiciary had tried to coerce social media companies and block their users, though it did not name the companies involved, X and Rumble.
Trump appears to identify with Bolsonaro, who attempted to overturn the results of his 2022 loss to Lula. Similarly, Trump was indicted in 2023 for his efforts to overturn the results of the 2020 U.S. presidential election.
The order would apply an additional 40% tariff on the baseline 10% tariff already being levied by Trump. But not all goods imported from Brazil would face the 40% tariff: Civil aircraft and parts, aluminum, tin, wood pulp, energy products and fertilizers are among the products being excluded.
The order said the tariffs would go into effect seven days after its signing on Wednesday.
Also Wednesday, Trump’s Treasury Department announced sanctions on Brazilian Supreme Court Justice Alexandre de Moraes over Bolsonaro’s ongoing trial and alleged suppression of freedom of expression.
Citing a personal grievance in trade talks with Brazil and now Canada’s symbolic announcement on a Palestinian state adds to the jumble of reasons Trump has pointed to for his trade war, such as stopping human trafficking, stopping the flow of fentanyl, balancing the budget and protecting U.S. manufacturing.
Price writes for the Associated Press. AP writer Josh Boak contributed to this report.
MONTREAL — Throughout his new term, starting with his inaugural address, President Trump has said he was “saved by God” to make America great again. In Canada, Prime Minister Mark Carney rarely evokes religion in public; his victory speech in April never used the word God. “Canada forever. Vive le Canada,” he ended.
As Canada and the U.S. now skirmish over Trump’s tariff threats and occasional bullying, the leaders’ rhetoric reflects a striking difference between their nations. Religion plays a far more subdued role in the public sphere in Canada than in its southern neighbor.
Trump posed in front of a vandalized Episcopal parish house gripping a Bible. He invites pastors to the Oval Office to pray with him. His ally, House Speaker Mike Johnson, says the best way to understand his own world view is to read the Bible.
Such high-level religion-themed displays would be unlikely and almost certainly unpopular in Canada, where Carney — like his recent predecessors — generally avoids public discussion of his faith. (He is a Catholic who supports abortion rights.)
There are broader differences as well. The rate of regular church attendance in Canada is far lower than in the U.S. Evangelical Christians have nowhere near the political clout in Canada that they have south of the border. There is no major campaign in Canada to post the Ten Commandments in public schools or to enact sweeping abortion bans.
Kevin Kee, a professor and former dean at the University of Ottawa, has written about the contrasting religious landscapes of the U.S. and Canada, exploring the rise of American evangelist Billy Graham to become a confidant of numerous U.S. presidents.
Christianity, Kee said, has not permeated modern Canadian politics to that extent.
“We have a political leadership that keeps its religion quiet,” Kee said. “To make that kind of declaration in Canada is to create an us/them situation. There’s no easy way to keep everybody happy, so people keep it quiet.”
A dramatic loss of Catholic power in Quebec
The mostly French-speaking province of Quebec provides a distinctive example of Canada’s tilt toward secularism. The Catholic Church was Quebec’s dominant force through most of its history, with sweeping influence over schools, health care and politics.
That changed dramatically in the so-called Quiet Revolution of the 1960s, when the provincial government took control of education and health care as part of a broader campaign to reduce the church’s power. The rate of regular church attendance among Quebec’s Catholics plummeted from one of the highest in Canada to the one of the lowest.
Among religiously devout Canadians, in Quebec and other provinces, some are candid about feeling marginalized in a largely secular country.
“I feel isolated because our traditional Christian views are seen as old-fashioned or not moving with the times,” said Mégane Arès-Dubé, 22, after she and her husband attended a service at a conservative Reformed Baptist church in Saint Jerome, about 30 miles north of Montreal.
“Contrary to the U.S., where Christians are more represented in elected officials, Christians are really not represented in Canada,” she added. “I pray that Canada wakes up.”
The church’s senior pastor, Pascal Denault, has mixed feelings about the Quiet Revolution’s legacy.
“For many aspects of it, that was good,” he said. “Before that, it was mainly the Catholic clergy that controlled many things in the province, so we didn’t have religious freedom.”
Nonetheless, Denault wishes for a more positive public view of religion in Canada.
“Sometimes, secularism becomes a religion in itself, and it wants to shut up any religious speech in the public sphere,” he said. “What we hope for is that the government will recognize that religion is not an enemy to fight, but it’s more a positive force to encourage.”
Denault recently hosted a podcast episode focusing on Trump; he later shared some thoughts about the president.
“We tend to think that Trump is more using Christianity as a tool for his influence, rather than being a genuine Christian,” he said. “But Christians are, I think, appreciative of some of his stances on different things.”
Trump’s religion-related tactics — such as posing with the Bible in his hands — wouldn’t go over well with Canadians, Denault said.
“They’d see that as something wrongful. The public servant should not identify with a specific religion,” Denault said. “I don’t think most Canadians would vote for that type of politician.”
Repurposed church buildings abound in Montreal
In the Montreal neighborhood of Hochelaga-Maisonneuve, the skyline is dotted with crosses atop steeples, but many of those churches are unused or repurposed.
For decades, factory and port workers worshipped at Saint-Mathias-Apotre Church. Today it’s a restaurant that serves affordable meals daily for more than 600 residents.
The manager of Le Chic Resto Pop, Marc-Andre Simard, grew up Catholic and now, like many of his staff, identifies as religiously unaffiliated. But he still tries to honor some core values of Catholicism at the nonprofit restaurant, which retains the church’s original wooden doors and even its confessional booths.
“There’s still space to be together, to have some sort of communion, but it’s around food, not around faith.” Simard said during a lunch break, sitting near what used to be the altar of the former church.
Simard says the extent to which the Catholic Church controlled so much of public life in Quebec should serve as a cautionary tale for the U.S.
“We went through what the United States are going through right now,” he said.
Elsewhere in Montreal, a building that once housed a Catholic convent now often accommodates meetings of the Quebec Humanist Association.
The group’s co-founder, Michel Virard, said French Canadians “know firsthand what it was to have a clergy nosing in their affairs.”
Now, Virard says, “There is no ‘excluding religious voice’ in Canada, merely attempts at excluding clergy from manipulating the state power levers and using taxpayers’ money to promote a particular religious viewpoint.”
History reveals why role of religion is so different in U.S. and Canada
Why are Canada and the U.S., two neighbors which share so many cultural traditions and priorities, so different regarding religion’s role in public life?
According to academics who have pondered that question, their history provides some answers. The United States, at independence from Britain, chose not to have a dominant, federally established church.
In Canada, meanwhile, the Catholic Church was dominant in Quebec, and the Church of England — eventually named the Anglican Church of Canada — was powerful elsewhere.
Professor Darren Dochuk, a Canadian who teaches history at University of Notre Dame in Indiana, says the “disestablishment” of religion in the U.S. “made religious life all the more dynamic.”
“This is a country in which free faith communities have been allowed to compete in the marketplace for their share,” he said.
“In the 20th century, you had a plethora of religious groups across the spectrum who all competed voraciously for access to power,” he said. “More recently, the evangelicals are really dominating that. … Religious conservatives are imposing their will on Washington.”
There’s been no equivalent faith-based surge in Canada, said Dochuk, suggesting that Canada’s secularization produced “precipitous decline in the power of religion as a major operator in politics.”
Carmen Celestini, professor of religious studies at the University of Waterloo in Ontario, said that even when Canadian politicians do opt for faith-based outreach, they often take a multicultural approach — for example, visiting Sikh, Hindu and Jewish houses of worship, as well as Christian churches.
Trump’s talk about Canada becoming the 51st state fueled a greater sense of national unity among most Canadians, and undermined the relatively small portion of them who identify as Christian nationalists, Celestini said.
“Canada came together more as a nation, not sort of seeing differences with each other, but seeing each other as Canadians and being proud of our sovereignty and who we are as a nation,” she said. “The concern that Canadians have, when we look at what’s happening in America, is that we don’t want that to happen here. “
Henao and Crary write for the Associated Press. Crary, who reported from New York, was the AP’s Canada bureau chief from 1995-99.
Beijing’s remarks come after Ottawa announced it would cease all Canadian operations of the company.
Canada’s request for Chinese surveillance equipment firm Hikvision to close local operations will “damage” bilateral trade, complicating recent efforts to improve ties between the countries, China’s Ministry of Commerce has said.
Beijing’s remarks came on Monday after Canadian Industry Minister Melanie Joly announced last week on the social media platform X that Hikvision Canada Inc had been ordered to cease all operations due to concerns their continuation would be “injurious” to the country’s security.
Her statement on Friday did not provide details on the alleged threat posed by Hikvision products, but said departments and agencies would be prohibited from using them, and that the government is “conducting a review of existing properties to ensure that legacy Hikvision products are not used going forward”.
China’s Commerce Ministry responded by accusing Ottawa of “over-generalising national security”, stating: “China is strongly dissatisfied.”
“This not only undermines the legitimate rights and interests of Chinese companies and affects the confidence of companies from both countries in cooperation, but also disrupts and damages the normal economic and trade cooperation between China and Canada,” the statement read.
“China urges Canada to immediately correct its wrong practices,” it added.
Hangzhou-based Hikvision is one of the world’s leading manufacturers of security cameras and other surveillance products, but it has faced scrutiny abroad for its role in Beijing’s alleged rights abuses against the Muslim minority Uighur population.
The United States included Hikvision in a 2019 blacklist of Chinese entities it said were implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs and other Muslim minority groups in Xinjiang.
The latest disagreement represents an early test for China-Canada relations after Prime Minister Mark Carney surged to electoral victory in April.
China said in response to the election result that Beijing was willing to improve ties with Ottawa, a relationship rocked in recent years by a range of thorny issues.
The arrest of a senior Chinese telecom executive on a US warrant in Vancouver in December 2018 and Beijing’s retaliatory detention of two Canadians on espionage charges plunged relations into a deep freeze.
Ties were further strained over allegations of Chinese interference in Canadian elections in 2019 and 2021, charges Beijing has denied.
Joly had said the decision to ban Hikvision had been reached following a “multi-step review” of information provided by the Canadian security and intelligence community.
As Canada pushes ahead with a new digital services tax on foreign and domestic technology companies, United States President Donald Trump has retaliated by ending all trade talks and threatened to impose additional tariffs on exports from Ottawa.
In a post on his Truth Social platform on Friday, Trump called the new Canadian tax structure a “direct and blatant attack on our country”, adding that Canada is “a very difficult country to trade with”.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” he wrote. He added that he would announce new tariffs of his own for Canada in a matter of days.
US companies such as Amazon, Meta, Google and Uber face an estimated $2bn in bills under the new tax.
Trump’s decision marks a sharp return to trade tensions between the two countries, abruptly ending a more cooperative phase since Mark Carney’s election as Canada’s prime minister in March.
It also marks a further escalation in the trade-as-pressure tactic under Trump’s second term in Washington.
The US is Canada’s largest trading partner by far, with more than 80 percent of Canadian exports destined for the US. In 2024, total bilateral goods trade exceeded US$762bn, with Canada exporting $412.7bn and importing $349.4bn – leaving the US, which counts Canada as its second-largest trading partner, with a goods deficit of $63.3bn.
A disruption due to tariffs on products like automobiles, minerals, energy or aluminium could have large ripple effects across both economies.
So, what is Canada’s digital tax? Why is Carney facing domestic pushback on the taxes? And how is Washington responding?
What is Canada’s digital services tax?
Canada’s Digital Services Tax Act (DSTA) came into force in June last year. It is a levy on tech revenues generated from Canadian users – even if providers do not have a physical presence in the country.
The DSTA was first proposed during the 2019 federal election under then-Prime Minister Justin Trudeau, and received approval in Canada on June 20, 2024. It came into force a week later, on June 28. The first payments of this tax are due on Monday, June 30, 2025.
Large technology firms with global revenues exceeding $820m and Canadian revenues of more than $14.7m must pay a 3 percent levy on certain digital services revenues earned in Canada. Unlike traditional corporate taxes based on profits, this tax targets gross revenue linked to Canadian user engagement.
Digital services the levy will apply to include: Online marketplaces, social media platforms, digital advertising and the sale or licensing of user data.
One of the most contentious parts of the new framework for businesses is its retroactive nature, which demands payments on revenues dating back to January 1, 2022.
Canada’s Prime Minister Mark Carney walks with President Donald Trump after a group photo at the G7 Summit, on Monday, June 16, 2025, in Kananaskis, Canada [Mark Schiefelbein/AP]
Why is Trump suspending trade talks over the new tax?
On June 11, 21 US Congress members sent a letter to President Trump, urging him to pressure Canada to eliminate or pause its Digital Services Tax. “If Canada decides to move forward with this unprecedented, retroactive tax, it will set a terrible precedent that will have long-lasting impacts on global tax and trade practices,” they wrote.
Then, in a Truth Social post on Friday this week, Trump said Canada had confirmed it would continue with its new digital services tax “on our American Technology Companies, which is a direct and blatant attack on our Country”.
He added that the US would be “terminating ALL discussions on Trade with Canada, effective immediately” and that he would be levying new tariffs of his own on Canada within seven days.
“They have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products,” Trump said, adding, “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.”
Later, at the Oval Office, Trump doubled down, saying: “We have all the cards. We have every single one.” He noted that the US holds “such power over Canada [economically]”. “We’d rather not use it,” Trump said, adding: “It’s not going to work out well for Canada. They were foolish to do it.
“Most of their business is with us, and when you have that circumstance, you treat people better.”
Trump also said he would order a Section 301 investigation under the Trade Act to assess the DSTA’s effect on US commerce, which could potentially lead to other punitive measures.
On Friday, White House National Economic Council director, Kevin Hassett, told the Fox Business Friday programme: “They’re taxing American companies who don’t necessarily even have a presence in Canada.”
Calling the tax “almost criminal”, he said: “They’re going to have to remove it. And I think they know that.”
How has Canada responded?
Relations had seemed friendlier between the two North American neighbours in recent months as they continue with trade talks. Trump and former Prime Minister Justin Trudeau had clashed previously – with Trump calling Trudeau “very dishonest” and “weak” during the 2018 G7 talks in Canada.
But newly elected Carney enjoyed a cordial visit with Trump in May at the White House, while Trump travelled to Canada for the G7 summit in Alberta on June 16 and 17. Carney said at the summit that the two had set a 30-day deadline for trade talks.
In a brief statement on Friday, Prime Minister Carney’s office said of Trump’s new threats to suspend trade talks over the digital tax: “The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses.”
Last week, Canadian Finance Minister Francois-Philippe Champagne told reporters that the digital tax could be negotiated as part of the broader, ongoing US-Canada trade discussions. “Obviously, all of that is something that we’re considering as part of broader discussions that you may have,” he had said.
Those discussions had been expected to result in a trade deal in July. However, they are now in limbo.
What do Canadian business leaders say?
Carney has been facing pressure from domestic businesses as well, which have lobbied the government to pause the digital services tax, underlining that the new framework would increase their costs for providing services and warning against retaliation from the US.
The Business Council of Canada, a nonprofit organisation representing CEOs and leaders of major Canadian companies, said in a statement that, for years, it “has warned that the implementation of a unilateral digital services tax could risk undermining Canada’s economic relationship with its most important trading partner, the United States”.
“That unfortunate development has now come to pass,” the statement noted. “In an effort to get trade negotiations back on track, Canada should put forward an immediate proposal to eliminate the DST in exchange for the elimination of tariffs from the United States.”
Italy’s Prime Minister Giorgia Meloni, from left, France’s President Emmanuel Macron, Canada’s Prime Minister Mark Carney, President Donald Trump, UK Prime Minister Keir Starmer and Germany’s Chancellor Friedrich Merz participate in a session of the G7 Summit, Monday, June 16, 2025, in Kananaskis, Canada (AP Photo/Mark Schiefelbein) (AP)
Has Trump used tariffs to pressure Canada before?
Yes. Prior to the DSTA, Trump has used tariffs to pressure Canada over what he says is its role in the flow of the addictive drug, fentanyl, and undocumented migration into the US, as well as broader trade and economic issues.
On January 20, in his inaugural address, Trump announced a 25 percent tariff on all Canadian goods and a 10 percent tariff on Canadian energy resources. Trump claimed that Canada has a “growing footprint” in fentanyl production, and alleged that Mexican cartels operate fentanyl labs in Canada, particularly in British Columbia, Alberta and Ontario.
These tariffs were paused for 30 days following assurances from Canada that appropriate action would be taken to curb the flow of fentanyl, and then re-imposed in early March.
Do other countries levy a similar digital tax?
Yes, several countries around the world have introduced digital services taxes (DSTs) similar to Canada’s. France was one of the first to introduce a DST in 2019, eliciting an angry response from Trump who was serving his first term as president. The French tax is a 3 percent levy on revenues from online advertising, digital platforms and sales of user data.
The UK followed with a 2 percent tax on revenues from social media platforms and search engines. Spain, Italy, and Austria have also implemented similar taxes, with rates ranging from 3 to 5 percent. Turkiye has one of the highest DST rates at 7.5 percent, covering a wide range of digital services such as content streaming and advertising.
Outside Europe, India has a 2 percent “equalisation levy” on foreign e-commerce operators which earn revenues from Indian users. Kenya and Indonesia have also created their own digital tax systems, though they’re structured slightly differently – Indonesia, for instance, applies Value Added Tax (VAT) – or sales tax – on foreign digital services, rather than a DST.
The US government has strongly opposed these taxes; some of these disputes have been paused as part of ongoing negotiations led by the Organization for Economic Co-operation and Development (OECD), an international organisation made up of 38 member countries, which is working on a global agreement for taxing digital companies fairly.
Canada held off on implementing its DST until 2024 to give time for the OECD talks. But when progress stalled, it went ahead with the 3 percent tax that applies retroactively since January 2022.
Should the EU be worried about this?
The European Union is likely to be watching this situation closely as digital tax is likely to be a key concern during its own trade talks with the US.
Trump has repeatedly warned that similar tax measures from other allies, including EU countries, could face severe retaliation.
Trump’s administration has previously objected to digital taxes introduced by EU member states like France, Italy, and Spain. In 2020, the US Trade Representative investigated these taxes under Section 301 and threatened retaliatory tariffs, though those were paused pending OECD-led global tax negotiations.
The European Commission has confirmed that digital taxation remains on the agenda, especially if a global deal under the OECD fails to materialise. President Ursula von der Leyen said on June 26 that “all options remain on the table” in trade discussions with the US, including enforcement mechanisms against discriminatory US measures.
The high-stakes trade negotiations ongoing between the US and the EU have a deadline for July 9 – the date that Trump’s 90-day pause on global reciprocal tariffs is due to expire. Trump has threatened to impose new tariffs of up to 50 percent on key European exports, including cars and steel, if a deal is not reached.
In response to these threats, the EU has prepared a list of retaliatory tariffs worth up to 95 billion euros ($111.4bn), which would target a broad range of US exports, from agricultural products to Boeing aircraft. EU leaders have signalled that they will defend the bloc’s tax sovereignty, while remaining open to negotiation.
At the start of the G7 Summit, Canada’s Prime Minister Mark Carney said the world is facing a historic turning point. He warned that it is becoming more dangerous and divided, and urged world leaders to strengthen cooperation.
