President Donald Trump announced the end of trade negotiations with Canada and a 10% tariff increase in retaliation for an Ontario TV ad criticizing U.S. tariffs. Canadian Prime Minister Mark Carney sidestepped direct response and stressed Canada's readiness to resume talks. This friction occurs amid the T-MEC review, driven by U.S. electoral motives.
On Saturday, Donald Trump stated he is halting all trade talks with Canada over a TV ad from Ontario province, aired in the U.S., featuring clips of former President Ronald Reagan criticizing tariffs. 'Due to their grave misrepresentation of facts and hostile act, I am increasing the tariff on Canada by 10 percent above what they currently pay,' Trump said aboard Air Force One. Ontario Premier Doug Ford had promised to stop the ad after the weekend, but the measure went ahead.
Mark Carney, in Malaysia for the ASEAN meeting, gave a concise reply: 'Canada is willing to build on the progress we have been making in our negotiations or discussions with our American counterparts.' He stressed that talks are a federal responsibility and the best path forward, adding: 'We cannot control U.S. trade policy.' Carney does not expect to meet Trump at Asian summits and is using his nine-day trip—including Singapore and APEC in South Korea—to diversify Canadian trade, aiming to double non-U.S. exports in a decade.
Canada currently faces a 35% U.S. base tariff, exempted for most under T-MEC, though Trump did not specify if the increase preserves it. Sectoral tariffs apply: 50% on steel and aluminum, and 25% on autos with partial exemption. Prior negotiations, like Carney's White House visit on October 7, sought reductions, but Trump stopped them Thursday.
This rush to review T-MEC stems from electoral risks: in 2026, Republicans could lose their House majority (currently 220-215), with polls favoring Democrats by 2-3%. Historically, they lose 28 seats in midterms. Experts like Enrique Quintana note a quick deal would serve as Trump's 'electoral lever,' promoting reindustrialization, but risks forced concessions for Mexico and Canada, potential price hikes, and inflation.