Prime Minister Mark Carney’s decision to formally recognize Palestinian statehood has sparked a sharp backlash from U.S. President Donald Trump, threatening to derail high-stakes Canada-U.S. trade talks just days before a critical tariff deadline.
Late Thursday, Trump posted on Truth Social, warning that Canada’s move could upend negotiations: “Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them.”
Trade relations between the two countries have been strained since Trump’s return to office, marked by a new wave of tariffs and retaliatory measures. The current round of negotiations, launched earlier this year, aims to avoid further escalation—but Trump has made clear that unless a deal is reached by Friday, a fresh 35% tariff on Canadian goods will be imposed.
U.S. Commerce Secretary Howard Lutnick confirmed this week there would be no further extensions. “Aug. 1, the tariffs are set. They’ll go into place. Customs will start collecting the money, and off we go,” he stated.
Carney, meanwhile, stood by Canada’s recognition of Palestine in a statement released Wednesday, reaffirming long-standing Canadian support for a two-state solution.
“Canada has long been committed to a two-state solution, an independent, viable, and sovereign Palestinian state living side by side with the State of Israel in peace and security,” he said. “For decades, it was hoped that this outcome would be achieved through a negotiated settlement. Regrettably, that approach is no longer tenable.”
The announcement adds a new layer of complexity to already tense U.S.-Canada relations. It also underscores widening divisions among Western allies over the war in Gaza, reignited by the October 7, 2023, Hamas-led assault that killed around 1,200 people in Israel and resulted in hundreds taken hostage.
While Canada’s position aligns with growing international calls for Palestinian statehood, the timing—just ahead of a potential trade showdown—could have significant diplomatic and economic consequences. As the Friday deadline approaches, both countries are navigating a fragile balancing act that could reshape bilateral ties for years to come.
