Trump says US and Canada working on formula for tariff deal

US tariffs on steel, aluminum, autos and lumber are battering key Canadian industries.

President Donald Trump said he expects the US and Canada can “get there” on a resolution to their dispute over sectoral tariffs on steel, aluminum and autos.

Trump made the remarks in an Oval Office meeting with Canadian Prime Minister Mark Carney on Tuesday, where the president described the disagreements between the countries as “natural conflicts” because they’re competing for the same business.

“That’s why I keep mentioning one way to solve that problem is a very easy way,” Trump said, an apparent reference to his suggestion that Canada should be the 51st US state, an idea that is widely opposed by Canadians.

“He wants to make cars, we want to make cars, and we’re in competition. And the advantage we have is we have this massive market,” Trump said as he sat next to Carney.

The meeting marks Carney’s second visit to the White House since becoming prime minister earlier this year — with a trading relationship worth $900 billion on the line. The former central banker won an election in April on a promise to negotiate a new trade and security deal with the US, but Trump has only hiked tariffs since then.

Carney told Trump that Canada is the US’s largest foreign investor, and suggested the pace of investment may accelerate — “probably $1 trillion in the next five years, if we get the agreement we expect to get. “

“There are areas where we compete, and it’s in those areas where we have to come to an agreement that works,” Carney said. “But there are more areas where we are stronger together, and that’s what we’re focused on.”

US tariffs on steel, aluminum, autos and lumber are battering key Canadian industries. And on Aug. 1, Trump raised levies on goods that don’t comply with the US-Mexico-Canada Agreement to 35% from 25%. The trade war has caused job losses and put a chill on business investment, pushing Canada’s economy to contract in the second quarter.

Canada is the largest foreign buyer of US-made vehicles, and also exports most of its own automotive production to the US market.

Carney offered an olive branch to Trump in August when he announced the lifting of most of Canada’s retaliatory tariffs on imports from the US. Carney’s predecessor, Justin Trudeau, imposed counter-tariffs on about C$60 billion ($43 billion) of US products. Canada’s new policy on counter-tariffs is to apply them to areas where US tariffs are in place, such as steel and aluminum.

“We’re working on formulas and I think we’ll get there,” Trump said of the trade discussions.

Carney’s top negotiators, including his cabinet minister responsible for US trade, Dominic LeBlanc, and Canada’s ambassador to the US, Kirsten Hillman, are still pushing for a near-term deal that would see some sectoral tariffs lowered or dropped.

But Carney has begun to signal a shift in focus somewhat to the 2026 review of the North American free trade deal Trump signed in his first term.

Carney traveled to Mexico last month and pledged deeper cooperation with President Claudia Sheinbaum ahead of the review process. His officials have tried to pitch the US on the importance of fortified North American supply chains, especially in Canada’s wealth of critical minerals, as a counter to China’s dominance.

He has also attempted to address long-standing US complaints about Canada’s low military spending, agreeing to meet the North Atlantic Treaty Organization’s target of spending 2% of gross domestic product on defense this year and pledging to ramp up to 5% by 2035. Trump said he expected the two leaders would discuss the US’s proposed Golden Dome missile defense system during Tuesday’s meeting.