Trump-Carney Meeting: Navigating Trade Tensions and What It Means for Canadian Businesses

Donald Trump and Mark Carney

On May 6, 2025, Canadian Prime Minister Mark Carney met U.S. President Donald Trump at the White House, a high-profile encounter aimed at addressing escalating trade tensions and Trump’s provocative 51st-state rhetoric. With 25% tariffs hammering Canadian exports and the U.S.-Canada trade relationship—worth over $1 trillion annually—under strain, the stakes for Canadian businesses are enormous. While Carney called the talks “constructive” and firmly declared Canada “not for sale,” the outcomes reveal a complex reality: diplomatic progress tempered by persistent economic challenges. Here’s what happened, how it impacts Canadian businesses, and what to watch in the months ahead.

The Meeting: Diplomacy Amid Tariff Threats

Carney, leveraging his global economic stature, sought to reset a trade relationship rocked by Trump’s tariffs on Canadian steel, aluminum, cars, and other goods. The meeting was cordial—Trump called Carney “very talented” and praised Canada as a “special place,” a stark contrast to his frosty exchanges with former PM Justin Trudeau. Carney echoed the positivity, describing the talks as “substantive” and noting a shared commitment to meet again at the G7 summit in Alberta in June 2025. Yet, beneath the smiles, Trump’s refusal to budge on tariffs and his ambiguous response to Canada’s sovereignty underscored the challenges facing Canadian businesses.

Were the Talks Truly Constructive?

Carney’s claim of “constructive” talks reflects diplomatic progress: the leaders established a working rapport, discussed global issues like Russia-Ukraine, and agreed to ongoing negotiations. For businesses desperate for trade stability, this open channel offers hope for future concessions. Carney’s press conference at the Canadian Embassy emphasized feeling “better about the relations,” suggesting a foundation for tackling the $60 billion in retaliatory tariffs Canada has imposed and the broader trade war.

However, “constructive” doesn’t mean immediate relief. Trump was blunt, stating that “nothing” Carney said would lift the 25% tariffs, which are costing Canada an estimated 2.6% of GDP—roughly $1,900 per person annually. Industries like automotive, steel, and agriculture face higher costs and reduced U.S. market access, with no clear timeline for resolution. Public sentiment on X reflects frustration, with some calling Carney’s performance “weak” and questioning his ability to counter Trump’s hardline stance. While not definitive, this highlights the gap between diplomatic optimism and economic pain felt by businesses.

Canada “Not for Sale”: Did Trump Listen?

Carney was unequivocal, telling Trump in the Oval Office that Canada is “not for sale” and “never will be,” directly asking him to stop referencing Canada as a potential 51st state. This stance was critical, as Trump’s annexation rhetoric—amplified by claims that statehood would bring Canadians a “massive tax cut”—has rattled markets and fueled uncertainty. Carney framed Canada as a sovereign partner, not a subordinate, a message vital for businesses worried about U.S. economic overreach.

Trump’s response was less reassuring. He acknowledged opposition to annexation, saying, “Takes two to tango, right?” and calling it a “non-starter.” Yet, he quickly added, “Never say never,” and “Time will tell,” signaling he’s not fully abandoning the idea. His pre-meeting Truth Social post downplayed Canada’s economic importance, claiming the U.S. doesn’t need Canadian cars, energy, or lumber—only “friendship.” This suggests Trump is using the 51st-state narrative as leverage to pressure Canada into trade concessions, such as greater access to energy or alignment on security issues like fentanyl trafficking. For businesses, this ambiguity raises the risk that tariff relief could come at the cost of compromises that erode Canada’s economic autonomy.

Impacts on Canadian Businesses

Positives:

• Pathway to Future Talks: The commitment to reconvene at the G7 keeps negotiations alive, offering a chance for tariff relief or a new trade deal. This is critical for exporters like automotive manufacturers, who rely on the U.S. for 75% of their market.

• Diplomatic Reset: The friendly tone reduces the risk of further trade escalation, providing some stability for businesses planning investments or supply chains.

• Sovereignty Affirmed: Carney’s firm stance reassures firms that Canada will protect its economic interests, potentially safeguarding industries like energy from U.S. overreach.

Negatives:

• Tariff Burden Persists: With no tariff relief, businesses face ongoing cost increases and competitiveness challenges. The automotive sector, for instance, is hit hard by tariffs on non-USMCA-compliant goods, disrupting cross-border supply chains.

• USMCA Uncertainty: Trump’s hints at revisiting the U.S.-Mexico-Canada Agreement (USMCA) in 2026, possibly invoking its sunset clause, threaten long-term trade stability. This uncertainty complicates planning for manufacturers and exporters.

• Economic Leverage via Annexation Rhetoric: Trump’s refusal to fully disavow the 51st-state idea keeps businesses on edge, as it could signal demands for unfavorable trade terms, impacting sectors like natural resources.

What Canadian Businesses Should Watch

1. G7 Summit (June 2025): The next Trump-Carney meeting could yield progress on tariffs or trade terms. Businesses should monitor whether Carney can leverage global allies to pressure Trump, particularly for industries like steel and agriculture.

2. USMCA Review Risks: Trump’s comments suggest a potential USMCA overhaul. Firms reliant on duty-free U.S. access—especially in automotive and manufacturing—should prepare for renegotiation scenarios.

3. Domestic Relief Measures: Carney has promised affordability measures, such as tax deferrals or employment insurance waivers, to offset tariff impacts. The scope and timing of these could provide relief, particularly for small businesses.

4. Border and Security Talks: Carney emphasized addressing U.S. concerns about fentanyl and border security. Progress here could be a bargaining chip to ease tariffs, indirectly benefiting exporters.

5. Retaliatory Tariffs: Canada’s $60 billion in retaliatory tariffs may protect some sectors but risk U.S. counter-measures. Businesses in targeted industries, like energy, should brace for potential fallout.

The Road Ahead: Resilience and Diversification

The Trump-Carney meeting was a diplomatic step, not a game-changer. For Canadian businesses, the reality is sobering: tariffs persist, Trump’s 51st-state rhetoric lingers as a negotiation tactic, and USMCA uncertainty looms. While Carney’s optimism and commitment to further talks offer hope, businesses must act now to weather the storm. Diversifying markets—Carney has hinted at strengthening European ties—can reduce reliance on the U.S. Investing in automation or domestic supply chains can also bolster resilience.

Carney faces a delicate balancing act: standing firm on sovereignty while securing economic concessions from a hard-nosed negotiator. Canadian businesses, from small manufacturers to global exporters, must stay vigilant, preparing for prolonged uncertainty while seizing opportunities from any breakthroughs at the G7 or beyond. Trump Carney meeting Canadian businesses