Carney nears US trade pact as Canada weighs tariff concessions for stability

Canadian Prime Minister Mark Carney is nearing a trade pact with the United States that would reduce US tariffs on Canadian steel, aluminum and autos while Canada removes retaliatory levies on those products.

Carney must convince Canadians that accepting some tariffs is worthwhile if the agreement brings greater economic certainty. He has said no deal is better than a bad deal, but is now weighing concessions against the risk of continuing tariff escalation.

The pact would support Carney’s broader goal of attracting capital to Canada. Business investment has been weak for years, with non-housing gross fixed capital formation falling to about 11% of GDP from roughly 14% at the end of 2014.

CIBC chief economist Avery Shenfeld said reducing the threat of escalating tariffs and counter-tariffs would improve Canada’s investment environment, even if uncertainty remained. Carney’s government has pledged to enable C$1 trillion in investment by 2030.

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