U.S. and Canada in "long-distance standoff": Carney says agreement is negotiable but can't sacrifice auto, steel, or aluminum; Trump warns Canadian economy will collapse

Nearly two weeks after US-Canada trade talks broke down, Canadian Prime Minister Carney signaled a willingness to restart negotiations, while emphasizing that any future agreement must offer "stability and credibility," and that the competitiveness of Canada's auto, steel, and aluminum industries cannot be sacrificed in the talks.

According to reports, Carney stated on Thursday, September 3rd, local time, that Canada is ready to reach a mutually beneficial trade deal with the US. "As long as the US is ready, we are prepared to sit down and make an agreement," he said. He also pointed out that one of the key reasons previous negotiations failed to reach an accord was that the US side did not offer sufficient assurances regarding stable tariffs on steel, aluminum, and automobiles.

After Carney’s remarks, US President Trump quickly responded on social media, warning Carney that if he considered him an "enemy," it could eventually lead to a "collapse of the Canadian economy," which would pose serious political consequences for Canadian politicians.

Carney: Future Agreements Must Ensure Tariff Stability

Carney noted that the US and Canadian economies are highly integrated, especially in the automotive sector, where a unified North American supply chain has been established. Therefore, any future agreement must fully account for the competitiveness of Canada’s auto, steel, and aluminum industries, while also recognizing Canada’s domestic input in those industries.

He also revealed that the US has recently softened its stance on some issues. Previously, the US insisted that Canada make adjustments in areas such as language, culture, and streaming services. But in the final stages of negotiations, the US was no longer adamant about these demands.

Carney said this change means there is still room for renewed dialogue, though he did not predict when formal negotiations might restart.

Refuting US "Domestic Politics" Explanation: US Officials Not Canadian Politics Experts

Carney refuted statements by US Commerce Secretary Lutenik and Treasury Secretary Besent that Canada withdrew from negotiations due to domestic political reasons.

He said that the Canadian side understands its own political environment more deeply. "With all due respect," he noted, US cabinet officials who are appointed rather than elected are not experts on Canadian political issues.

Carney also emphasized that Canada would not "sit by the phone refreshing social media" waiting for the US to resume negotiations. Instead, Canada will continue to strengthen its own industries and pursue trade diversification to reduce its dependence on the US market.

Tariffs Implemented, Countermeasures Effective September 8, Negotiations Window Remains

After talks broke down on August 21, the US began imposing a 50% tariff on about $20 billion of Canadian goods starting from August 22. Canada had previously announced that, from September 8, it would implement equivalent retaliatory tariffs on about $20 billion of US goods.

This means that even with Carney’s signal of willingness to restart talks, the previously announced tariff measures remain in place. Meanwhile, auto tariffs remain among the thorniest points of contention between both sides. In earlier negotiations, the US had considered lowering the maximum auto tariff for Canada from 25% to 15%, and reducing steel and aluminum tariffs to 25%, but a final agreement was not reached.

The Trump administration had also previously threatened that, if no agreement was reached, tariffs on Canadian autos, trucks, and auto parts would rise to 50% from January 1 next year.

Therefore, the period before Canada’s retaliatory tariffs take effect on September 8 may still serve as a window for both sides to reassess negotiating conditions. However, Carney's latest comments do not imply that formal negotiations have already resumed, since core disagreements over auto, steel, and aluminum tariffs and trade policy stability remain unresolved.

Trump Responds Quickly: Canadian Economic “Collapse” Would Be Political Catastrophe

In response to Carney’s signals for renewed negotiation, Trump did not show any clear sign of softening his stance.

On social media, Trump declared that if Canadian politicians regard the US president as an "enemy," once the Canadian economy "collapses," they will find themselves in an "extremely bad" political situation. "The consequences will be worse than anything any Canadian politician has ever encountered," he said, adding, "wait and see."

This suggests that while Carney is emphasizing negotiation as a route for solutions, Trump remains in a high-pressure posture. Both sides are currently engaged in clear "back-and-forth" statements: Canada expresses willingness to return to the negotiation table, but insists on stable and credible tariff arrangements; the US continues to use economic pressure on Canada as leverage.

At the same time, Canada is accelerating efforts to reduce its dependence on the US market. On September 3, Carney announced that Canada would invest 4.7 billion Canadian dollars to build and maintain VIA Rail passenger cars in places like Thunder Bay, Ontario, with some railway vehicles previously manufactured in the US now shifting to domestic Canadian production.