WASHINGTON (BN24) — President Donald Trump sharply escalated his trade dispute with Canada on Monday, just one day before his self-imposed August 1 deadline for a new tariff deal, citing Canada’s decision to support Palestinian statehood as a significant obstacle to reaching an agreement.
Trump said it would be “very hard” to strike a trade deal with Ottawa following Prime Minister Mark Carney’s announcement that Canada intends to recognize a Palestinian state during a United Nations summit in September.
“Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them,” Trump wrote on Truth Social.
The U.S. is threatening to impose a sweeping 35% tariff on all Canadian exports not already covered by the U.S.-Mexico-Canada Agreement (USMCA) if a resolution is not reached by the deadline. Talks between U.S. and Canadian officials have intensified in recent days, but both sides signaled that a comprehensive resolution may remain out of reach.
Carney previously described the negotiations as “constructive,” but warned a final agreement that eliminates all tariffs by the August 1 deadline was unlikely.
Canada is America’s second-largest trading partner after Mexico and remains the top buyer of U.S. exports. In 2024, Canada purchased $349.4 billion worth of U.S. goods and exported $412.7 billion in return, according to U.S. Census Bureau data.
In addition to the looming 35% tariff, Canada already faces duties on its steel, aluminum, and vehicle exports to the United States. The dispute marks a new phase in an already fraught economic relationship.
Tensions between Ottawa and Washington have been building in recent months. In June, Carney’s government scrapped a proposed digital services tax on U.S. tech giants after Trump abruptly pulled out of trade talks, calling the tax a “blatant attack” on American business interests.
The latest blow came last week when Carney joined France and the United Kingdom in pledging to recognize Palestine as a state in September, amid worsening humanitarian conditions in Gaza.
“Canada condemns the fact that the Israeli government has allowed a catastrophe to unfold in Gaza,” Carney said, referring to starvation and displacement amid the ongoing war.
The move drew swift condemnation from Israel and its closest ally, the United States. The White House has not issued an official statement, but Trump’s public remarks suggest that Carney’s decision could have long-term trade implications.
Carney’s office did not immediately respond to requests for comment on Trump’s post.
