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US President Donald Trump appears onstage during a visit at US Steel Corporation–Irvin Works in West Mifflin, Pennsylvania, USA, on May 30, 2025.
What We’re Watching: Trump doubles metal tariffs, Canada Liberals bid to secure the border, Wildfires spread
Trump doubles steel and aluminum duties
Days after a judge nixed Donald Trump’s “Liberation Day” tariffs, the US president signed an executive order doubling steel and aluminum duties to 50%. Trump hopes the tariffs will boost domestic steel and aluminum industries, but the higher duties are terrible news for Canada, which is the top exporter of both metals to the US. Canada’s US-bound exports of steel were already down before Trump doubled the tariffs. Now they’re set to drop further — and take jobs with them. Mark Carney must now decide if he’ll respond, and risk provoking Trump, or back down and betray the anti-Trump, “elbows up” rhetoric he ran on.
Liberals introduce border bill in new Parliament
On Tuesday, Public Safety Minister Gary Anandasangareeintroduced the Strong Borders Act, which aims to strengthen border security, combat the trafficking of fentanyl and guns, and tackle money laundering. Anandasangaree said the bill was “not exclusively about the United States,” but admitted it aimed to remedy certain “irritants for the US.” The law would give the government sweeping discretionary powers — to open mail, for instance — so it is expected to meet a measure of resistance in Parliament.
Canadian wildfires send toxic smoke south
Wildfires in Canada have burned 2.1 million hectares (5.2 million acres) of land so far this year, sending hazardous smoke into the Midwest and East Coast of the United States, and even as far as Europe. Experts say the wildfire season in Canada is off to an extraordinary, and dangerous, start, reminiscent of the 2023 season, which was the worst in the country’s history. The flames are putting at risk the health of millions on both sides of the border.U.S. President Donald Trump and Canadian Prime Minister Mark Carney meet in the Oval Office at the White House in Washington, D.C., U.S., May 6, 2025.
There’s at least one area where Canada can thank Trump
Canadians might not like to hear this, but given President Donald Trump’s tariffs and threats, there’s at least one area of economic policy where the country owes the US leader a strange sort of thanks.
For decades, Canada’s 13 provinces and territories have maintained trade barriers against each other, a bewildering arrangement of tariffs, quotas, and regulations that has boosted prices, reduced efficiency, and yielded some absurd stories: A New Brunswick man whose beer was confiscated as he crossed provincial lines after a trip to Quebec has taken his case all the way to the supreme court.
But in response to Trump’s economic warfare on Canada, Prime Minister Mark Carney has promised to eliminate interprovincial trade barriers by July 1, Canada Day, a date that is equal parts symbolic and, let’s say, ambitious. The hope is that the economic impact of Trump’s tariffs can be at least partially mitigated by dropping Canada’s internal trade barriers.
Since 2017, Canada has had a Canadian Free Trade Agreement, but it was far from comprehensive and full of exemptions. The federal government is now talking about “one Canadian economy,” not 13. There’s even a minister in charge of it, Dominic LeBlanc, who will work with Chrystia Freeland, who is responsible for internal trade.
The cost of internal trade barriers is disputed. Ontario says they sap CA$200 billion (US$146.4 billion) of GDP a year. Other observers aren’t so sure. What’s certain is that barriers have long existed in Canada for a variety of reasons, including local protectionism for key provincial industries, such as fisheries in Atlantic Canada and timber in British Columbia, and industry-specific regulations, like where fish or lumber can be processed.
Doing away with trade barriers isn’t just a matter of lowering duties, but also of streamlining and harmonizing regulations across provinces. It’s a big lift, especially when one province, Quebec, tends to insist on greater protection for, among other things, its culture and its dairy industry, citing its distinctness.
To make progress, Carney this week held a meeting with provincial and territorial leaders, which ended with a commitment to “rapidly” reach an agreement on consumer goods, shipping, and harmonizing credentials. A nurse registered in Ontario, for example, should be able to practice in Saskatchewan within a month of moving there.
Some provinces have already struck their own bilateral trade deals. Ontario introduced legislation in April to lower barriers. It has since penned agreements with Alberta, Prince Edward Island, and Saskatchewan. In April, New Brunswick and Newfoundland and Labrador signed their own free trade agreement. Quebec says it’s open to deals and has a bill similar to Ontario’s. Ditto Manitoba. Nova Scotia is undertaking similar work.
These agreements and bills look like progress, and they are. But experts warn the hard part lies ahead in implementing what trade expert Diya Jiang and Canada expert Daniel Béland note are the “complex and technical” elements involved in trade liberalization, including various provincial regulations that account for local geography and climate. Driving a truck through the mountains of BC is different than cruising through the plains of Manitoba, for example.
As economist Trevor Tombeputs it, “Serious action requires provincial action,” and while he notes we’re seeing some of that, “much will depend on provincial follow-through.” That’s to say, for instance, that a province will have to be willing to give up industry protections, like laws in Newfoundland and Labrador that mandate local fish processing.
Still, even with all the obstacles, Tombe concludes, “We might be entering a new era for internal trade in Canada.” And for that, Canada, unexpectedly, has Trump to thank.
Calls for Albertan separatism are getting louder: Should Carney be worried?
King Charles III’s speech on Tuesday from the throne in Ottawa was like a family reunion for Canadian politicians.
Former Prime Minister Stephen Harper was there, joking around with his old opponent Justin Trudeau, who, playing to type, wore an inappropriate pair of running shoes. Justin’s mother, Margaret Trudeau, who has known the king for 50 years, embraced the monarch.
But one important person wasn’t there: Danielle Smith, premier of Alberta. Smith, who made a pilgrimage to Mar-a-Lago in January and skipped the last gathering of Canadian premiers in Ottawa, has shown mixed feelings about the Canadian federation.
As the king’s plane was en route back to London, Smith called on Carney to respond to a series of demands meant to boost Alberta’s energy industry: build a new oil pipeline, loosen emissions and regulatory rules, scrap a tanker ban, and drop net-zero electricity requirements.
“Albertans need to see meaningful action within weeks — not months,” she threatened.
The unstated threat is Smith’s plan for a referendum that could theoretically allow Alberta to separate, after which it could, in theory, join the United States.
Smith, whose political ideology veers toward libertarianism, warned during the recent election that if easterners replaced Trudeau with Carney, it could produce an “unprecedented national unity crisis.” The day after Carney won, she presented a bill that will make it possible for Alberta to hold an independence referendum, likely next year.
The best local polling suggests that if a referendum were held today, it would fail, with only 28% of Albertans saying they’d vote to separate, compared to 67% who’d want to stay.
Numbers often change during a campaign, though, and uncertainty about the province’s future is already damaging the investment climate, so Carney faces pressure to bring Smith onside. Even his ally, Conservative Ontario Premier Doug Ford, says it’s time to show her some love.
Carney will have an opportunity to do just that when he flies to neighboring Saskatchewan to meet with Smith and the other premiers on Monday.
Carney pledged, via the king’s speech, to speed regulatory approvals so Canada can become the “world’s leading energy superpower in both clean and conventional energy.” And executives in the oil patch were cheered by a boosterish speech from his natural resources minister, Tim Hodgson. They hope that Carney and Hodgson will help them find ways to get their petroleum to foreign markets, rather than selling it at a discount to the United States.
But it is unlikely that he can deliver on Smith’s demands. British Columbians and Quebecers are both apt to resist new pipelines across their provinces, and if he removes the emissions cap, Carney risks losing support among voters worried about climate change.
Even if he does make some concessions to Alberta, chances are he won’t take the steam out of the separatist movement entirely. Smith needs to keep the separatists in her corner, rather than risk losing those voters to the province’s upstart Republican Party. That means a referendum is all but certain to go ahead.
Like former UK Prime Minister David Cameron before the Brexit referendum, Smith is trying to buy herself some time. And even Albertans who don’t want to secede still hope the threat will improve her negotiating position with Carney.
The wild card in the mix is Donald Trump, who is widely admired among the Albertan separatists and who regularly says Canada should agree to be annexed.
Could Alberta’s secessionist movement provide an opening for Trump to stir up trouble? He must know the province sits atop the world’s fourth-largest oil reserve. Does Trump look at Alberta the way Vladimir Putin once looked at the Donbas?
The stakes are high and the pressure is on Carney. He has been a successful banker, business executive, and campaigner. After his trip to Saskatchewan, Canadians might get a sense of whether he can master the difficult regional-power politics necessary to be a successful prime minister.
A sign calling for the protection of ostriches at the Universal Ostrich Farms is displayed in Edgewood, B.C., Canada, on May 17, 2025.
HARD NUMBERS: Trump officials fight ostrich culling, Mark Carney wants to ReArm with Europe, Wildfires in Manitoba, Golden Dome price set
300: Senior Trump administration figures, including Robert F. Kennedy Jr. and Mehmet Oz, are lobbying Canada to spare over 300 ostriches set to be culled due to bird flu concerns at a British Columbia farm. The farm’s owners dispute the extent of the outbreak, arguing most birds are healthy. Oz has offered to relocate the ostriches to his Florida ranch. Canadian officials insist they must be killed to protect public health and the poultry industry, as avian flu outbreaks spread across both countries.
5: Currently, 75 cents of every dollar Canada spends on defense goes to the US defense industry. But Prime Minister Mark Carney says he wants Canada to join ReArm Europe — a major European defense initiative — by July 1, in order to reduce reliance on US military spending. ReArm Europe aims to increase member nations’ defense spendings to 5% of GDP and, crucially, to do so without heavily importing from US arms manufacturers.
17,000: Over 17,000 people are being evacuated in Manitoba amid the province’s worst start to the wildfire season in years. There are 134 active fires across Canada — half of them burning out of control — in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario, while the country braces for another deadly fire season.
$61 billion: US President Donald Trump says he has told Canada it will have to pay $61 billion to be part of his proposed Gold Dome missile defense system — or it can be included for free if it becomes the “cherished 51st state.”
Then-Bank of England Governor Mark Carney shakes hands with then-Chinese Premier Li Keqiang before the 1+6 Round Table Dialogue meeting at the Diaoyutai State Guesthouse, in Beijing, China, on September 12, 2017.
Canada faces a choice between the US and China
Amid a trade war and annexation threats, most eyes are on the US-Canada relationship right now. But the future of Canada’s relationship with China, the world’s second-largest economy, is also an open question, and observers wonder what rookie Prime Minister Mark Carney is going to make of it.
During Canada’s recent election, Carney said China was the country’s biggest security threat. On trade, the Liberal Party’s platform mentioned the Southeast Asian grouping ASEAN and the South American trade bloc MERCOSUR as potential partners for new trade deals, but not China. In fact, the party’s only mention of the superpower was in the context of security, and the necessity of being prepared to “face a hostile Russia or emboldened China.”
Some have called on Carney to build a stronger relationship with China — Canada’s second largest trade partner — particularly in the face of economic threats from Donald Trump, but his government seems wary of deepening ties with Beijing while Trump is trying to decouple the US from China.
The US and Canada have a trade relationship worth roughly $1 trillion a year, and they share a border, deep cultural ties, and a longstanding security relationship. The Trump administration, which is waging its own trade war with China, has made it clear that other countries must choose between Washington and Beijing. For now, it looks like Canada is siding with its neighbor.
Canadian Prime Minister Mark Carney gives a thumbs up as he departs after meeting with US President Donald Trump at the White House in Washington, D.C., USA, on May 6, 2025.
Elbows … up? Down? Which direction?
Canada’s new prime minister, Mark Carney, won the election largely by adopting a pugnacious “elbows up” posture against the Trump administration. But now that he’s in office, he’s adopted a more diplomatic posture. His meeting at the Oval Office two weeks ago was remarkably civilized. He even called Donald Trump a “transformative president,” though a careful observer will note the ambiguity attached to the characterization. The meeting was a prelude to future talks on trade and a renegotiation of the USMCA.
But Carney’s apparent change of heart caused problems for him last week, when Canada had reportedly dropped its retaliatory tariffs against the US. Some hawkish Canadians, including opposition Conservatives, cried foul, suggesting Carney had campaigned on being tough with Trump only to back down after winning. Whether or not the claim is accurate, it won’t stop government opponents from running with the narrative.
What’s really happened: Canada’s retaliatory tariffs are still largely in place, and Finance Minister François-Philippe Champagne says that 70% of tariffs for “end use” goods remain. The government has, however, temporarily paused some tariffs on food and beverage processing items, medical supplies and equipment, and vehicles.
The moves suggest the government is out to walk a fine line: standing up to Trump while also not provoking him and — critically — listening to domestic industries and consumers who aren’t eager to pay higher prices for essential American-made inputs simply to retaliate against the US.
The upshot: Carney isn’t in election-mode anymore. He’s governing, and watching his elbows. The strategy is to avoid antagonizing Trump, trying to bargain with him, while making it clear that Canada is not for sale and will never become the 51st state. It’s not quite what Carney ran on, but he seems to be betting that it has a better shot at working than waving a red cape in front of a bull.
US President Donald Trump and Canadian Prime Minister Mark Carney meet in the Oval Office at the White House in Washington, D.C., USA, on May 6, 2025.
Carney met Trump: How did it go?
The first official meeting between Canadian Prime Minister Mark Carney and US President Donald Trump was friendlier than you might expect given the recent tensions in the relationship. Carney described Trump as a “transformational” president, while the US leader said he had “a lot of respect” for his Canadian counterpart.
It wasn’t all pleasantries, however: Trump again said Canada should become the 51st state, to which Carney cautioned the former real estate magnate that “there are some places that are never for sale.”
Trump’s response? “Never say never.”
The start of a beautiful friendship? Despite some disagreements, the two leaders agreed to begin talks on new economic and security frameworks. The Canadian dollar even rallied slightly after the “positive” exchange.
But tariffs remain in place: Canada and the US are keeping their tariffs on each other’s steel, aluminum, and auto industries for now.
Next stop, the G7. The two men will meet again, along with other world leaders, when Canada hosts the G7 summit in Kananaskis, Alberta, next month. Ahead of that, Carney gave Trump a gift. What was it? A Kananaskis Country Golf Course hat, naturally, and some other gear from the resort.
For more on Tuesday’s White House tête-à-tête and upcoming trade talks, read GZERO’s interview below with former Canadian Progressive Conservative leader and Quebec Premier the Hon. Jean Charest.
Can Trump and Carney reset US-Canada relations?
But it has reduced cause for panic, in part because Trump stated a commitment of the United States to the basic alliance, to the security umbrella, to defending Canada as necessary, which was something he wasn't saying over the past few months with Justin Trudeau. He clearly likes Carney more than Trudeau, which is not surprising because that bar is pretty much on the floor. And also stopped with the governor speak, which is clearly disrespectful, but did push on the 51st state issue, and how much better it would be for Canada if they were actually a part of the United States, not that he intends to take it over militarily, but rather something he's going to keep talking about.
And Carney didn't interrupt Trump when he was going on and on, talking about that, but then responded with his best line of the conversation, which is, "I've spent the last couple months going around talking to the owners of Canada, meaning the voters, the citizens of Canada, and it's never, never, never going to happen." Trump says, "Never say never," and they kind of agree to disagree on something they shouldn't be talking about to begin with. But at the end of the day, not much there. The bigger problem, of course, is that there is an incredibly important trade relationship between the US and Canada. And no, it is not true that the US doesn't do much business with Canada. In fact, Canada actually buys more from the United States than any other individual country in the world does. And if you go talk to the governors, the senators, the representatives of all of the northern states that border Canada, they can tell you just how integrated those supply chains are, how essential the Canadian economy is for them.
And some of those are blue states, some of those are red states, and it don't really matter, they all care a lot about their relationship with Canada. So, it is important. But because Trump is individually taking the right to tariff from Congress, where it legally sits, and using legally contestable national emergency clauses to enforce tariffs, impose tariffs on other countries, including those that are governed by pre-existing trade relationships, like Canada, which has a robust USMCA, US-Mexico-Canada agreement, that Trump himself helped drive, negotiate, and trumpeted as a huge win at the time, but now he is singularly undermining it. And what that means is that we are very unlikely to get to a new agreed USMCA in the coming year, despite the utility of renegotiating it with the sunset clause, and instead... look, I don't think anyone's going to run away from it, I don't think it's going to break, instead, it means that every year we're going to kick it down the road and renegotiate so that you can keep it going.
And that means that the Canadians don't feel like they have a functional multilateral trade arrangement with the US and Mexico, that also means, because the US president can change it at any moment he wishes, and also that an enormous amount of time is going to be spent in those negotiations, not just now, but every year, creating more uncertainty for those that need to want to rely on the long-term stability of that trade relationship. And here is the rub, which is that the US-Canada relationship will stay important, it'll stay robust, but it will become more transactional, where it had been built on trust and shared values, and that means the Canadians will work really hard to hedge and de-risk their relations from their most important trading partner.
About 75% of Canadian trade is with the United States right now, they rely much more on the US than the Americans rely on Canada, Trump is absolutely right about that, but they now see that as a vulnerability. And for the last 40 years, the Canadians, really since '88, '89, the Canadians have focused singularly on increasing their interdependence with the United States. They built out all of this infrastructure from the provinces, not east-west, but rather north-south. If you look at the way that rail transit, and energy infrastructure, and supply chains work in Canada, it's as if these provinces were independent republics set up to do business just with the United States, not focused on what would make sense for an independent sovereign Canada over the long term, if that relationship suddenly were ruptured.
Well, that needs to change, and that's something that you're going to see the Canadians work very strongly on over the coming years. Easier for Carney to do, because his relationships internationally are much stronger than previous Canadian prime ministers, certainly generationally, if you think about the fact that he was Central Bank governor in the UK, and that one of his best international relationships is actually with the French president, Emmanuel Macron, and others and others, I think you're going to see a very strong effort to work with the UK, to work with the Commonwealth, to work with the EU, and to help shift those trade flows over time to hedge further away from the US.
And the costs of that will be significant, the impact of the trade rupture in the near term will be a major recession in Canada imminently, and a mild recession in the United States imminently as well, but over the long term, my view is no one benefits from that.
So, that's the main takeaway, a little less theatric maybe than the internet, apologies for that, but it is the way I see it, and I'll talk to you all real soon.