Canada-U.S. trade deal ‘not realistic at the present moment’: former ambassador

Canada's Ambassador to the United States David MacNaughton attends a business luncheon in Montreal, Wednesday, November 16, 2016. (THE CANADIAN PRESS/Graham Hughes)

Canada’s former ambassador to the U.S. says the federal government’s self-imposed deadline to reach a new economic and security deal with the U.S. is “not realistic at the present moment.”

“I don’t think that we’re going to reach anything of a significant breakthrough by the 21st,” David MacNaughton said in an interview with CTV News on Thursday. “I think one can always hope for the best, but I think that’s not realistic at the present moment, because I think what we’ve got right now is (U.S.) President Trump is feeling pretty confident of his own position, not just with Canada, but elsewhere.”

MacNaughton, who served as ambassador during Trump’s first term in office between 2016 and 2019, is currently a member of Prime Minister Mark Carney’s Council on Canada-U.S. Relations.

After CTV News spoke with MacNaughton, Trump announced on Thursday that the U.S. will charge a 35 per cent tariff on Canadian imports starting Aug. 1.

In an open letter to Prime Minister Mark Carney that was posted on Truth Social, Trump said “if for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 35% that we charge.”

The move led to Carney revising the deadline to Aug. 1 just hours later.

“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1,” Carney wrote in a statement on X late Thursday.

Carney set the initial July 21 deadline after meeting with Trump last month at the G7 Summit in Kananaskis, Alta. No official from the Trump administration has publicly declared that deadline.

The two countries have been in the throes of a trade war for months since the president’s first slate of tariffs on Canadian goods in February. Trump has since levied a series of sweeping and stacked tariffs on Canadian products, including a 25 per cent levy on steel and aluminum imports.

The deadline of July 21 is also the target date Carney said Canada would adjust counter-tariffs on steel and aluminum to levels “consistent” with progress made during trade negotiation with the U.S.

Speaking to reporters on Thursday on the sidelines of the ASEAN Summit in Malaysia, Foreign Affairs Minister Anita Anand said the federal government is “still hopeful” an agreement can be reached by July 21, despite the “complex negotiation.”

“Our teams are working extremely hard behind closed doors,” Anand said. “This is an effort that we are putting all our weight behind.”

But in an interview last week with CTV News, U.S. Ambassador Pete Hoekstra would not commit to July 21 to finalize an agreement.

Hoekstra also made it clear every country, including Canada, is “going to pay some level of tariff.”

“But the overall agreement, I think at the end of the day, is going to be good for Canada, and I think it’s going to be good for America,” Hoekstra said.

Should supply management be put on the table?

U.S. officials, including Trump, have long objected to Canada’s supply management dairy system, despite Canada agreeing to allow U.S. dairy farmers access to about 3.5 per cent of the domestic market as part of the Canada-U.S.-Mexico Agreement (CUSMA), which was signed in 2018 during the first Trump administration.

Supply management in Canada coordinates production and maintains import controls for dairy, poultry and eggs to set stable prices for both farmers and consumers.

Asked if the policy should be part of negotiations, MacNaughton said, “I don’t see the need for us to put supply management on the table,” adding it’s a “complicated equation” since the U.S. offers subsidies to farmers to support agricultural production, while also levying tariffs on some industries like agriculture to keep imports out.

In June, the Senate also adopted Bill C-202, which is aimed at protecting supply management from any future trade deals.

Deanna Horton, who was a former Canadian diplomat and negotiator on the original North American Free Trade Agreement (NAFTA), says like “any negotiation, it’s all about what do you have in your back pocket.”

“You have to wait until it’s getting down to the wire,” Horton said in an interview with CTV News. “My sense is that Canada will want to keep some of these things up until the last minute, including supply management.”

Canada has recently given Trump one concession during negotiations by rescinding the digital services tax less than two weeks ago.

The tax — first pitched by the Liberals in their 2021 budget — imposed a three per cent levy on revenues over $20 million from tech giants earning money off Canadian content and Canadian users, with first payments due on June 30.

But in a post to Truth Social on June 27, Trump abruptly ended trade talks over the tax. Two days later, Carney cancelled the policy and negotiations between the two countries resumed.

While describing the ongoing talks as a “volatile situation,” MacNaughton says the federal government should be “patient” and “prepared to extend the discussions.”

“I think it’s just a matter of not panicking because I don’t think (Trump is) ready to do a deal that would be in Canada’s best interest. So, I don’t think we should be rushed into it,” MacNaughton added.

The former ambassador also tells CTV News that Canadians are “going to have to suffer some pain” in the meantime.

“I think Canadians are going to have to understand that this isn’t going to be simple. It’s not going to happen anytime quickly,” MacNaughton said, emphasizing the ongoing work by Canada to diversify its markets.

With files from CTV News’ Spencer Van Dyk