The outgoing Canadian prime minister Justin Trudeau is “angling to revive” negotiations for a free trade agreement with the UK in order to mitigate the potential disruption caused by Donald Trump’s return to the White House.
Since his inauguration last month, the US president has threatened and imposed tariffs on multiple countries in a bid to put American interests first, including its neighbours Mexico and Canada, and its geopolitical rival China.
Duties of up to 25% on Mexican and Canadian goods were postponed yesterday, however, after both countries agreed to impose new border security measures.
Ottawa pivots
Despite the delay, Canada is now looking to pivot its trade strategy in order to manage the potential impact of US tariffs on its economy.
“We now have both a great opportunity and a great reason to work really hard at trade diversification,” Canadian High Commissioner to the UK, Ralph Goodale, told Politico.
The two countries currently trade under a ‘rollover’ of a deal that was in place from the UK’s previous membership of the EU. Talks for a post-Brexit bilateral agreement were halted in early 2024 due to disputes over hormone-treated beef from Canada and access for British cheesemakers and some carmakers to the North American market.
Canada and Mexico are also the only members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that have yet to ratify the UK’s membership of the 12-nation pact.
“It would be helpful to take another go at that and see what we can accomplish in the shortest possible time,” Goodale said.
“We realise we’re dealing with a new government with a different set of priorities and it may take them a while to do the internal consideration that they need to do, and that’s understandable.”
‘Open and strong’ discussions
The UK and EU have not yet had tariffs imposed against them, but Trump has hinted that he may introduce levies on both.
His threats against Brussels are more severe though, saying that he will “definitely” introduce measures against them. By contrast, he has said that although the UK is “out of line” on trade, he believes that the situation “can be worked out”.
At a joint news conference with NATO's secretary general Mark Rutte yesterday, British prime minster Sir Keir Starmer said that he has had “open and strong” discussions with Trump on trade, but that it was “early days”.
"On the question of tariffs it's early days, and I think what's really important is open and strong trading relations and that has been the basis of my discussions with President Trump,” he said.
A Downing Street spokesperson yesterday echoed comments made by business and trade secretary Jonathan Reynolds earlier this week, when telling Sky that the UK is in a better position than the EU regarding US trade, due to not having a significant surplus of exports in relation to imports from the North American superpower.
“[We] have a fair and balanced trading relationship which benefits both sides of the Atlantic,” they said.
Risk and opportunity
Marco Forgione, the director general of the Chartered Institute of Export & International Trade, has commented that there are “significant” risks and opportunities for the UK, as it looks to forge diplomatic ties with the EU, China and US, as well as other western allies like Canada, in the new Trump era.
He said that Trump’s ‘America first’ policy will undoubtedly change the global economy and trading ecosystem.
“It’s clear that President Trump’s administration has a comprehensive plan to unpick the multilateral administrative system,” he said.
“Tariffs are being used to exert geopolitical pressure in pursuit of a broad range of impacts. First securing the US borders with Mexico and Canada. Second to enforce US hegemony in South America. Third to redress President Trump’s belief that China is engaged in unfair trade practices and currency manipulation. Fourth to remove perceived trade barriers to US businesses.”
“This systemic change will impact the global economy. All nations, whether directly targeted or not, will feel the repercussions. The uncertainty and instability is already making markets jittery, we live in a time when a nation changes policy based on a presidential social media post made from the golf course.”
“No one should doubt President Trump and his administration’s resolve to not only put right, in their view, America’s exploitation by other nations, but more importantly to reset the entire global system,” he added.
