WASHINGTON — Prime Minister Mark Carney expressed disappointment on Friday after U.S. President Donald Trump implemented a 35% tariff on Canadian goods. This decision follows Trump's earlier threats to raise tariffs if Canada did not agree to a trade deal.

In a statement released shortly after midnight, Carney said, "While we will continue to negotiate with the United States on our trading relationship, the Canadian government is laser focused on what we can control: building Canada strong."

The White House clarified that the new tariffs would not apply to goods that comply with the Canada-U.S.-Mexico Agreement (CUSMA). Earlier in the week, Carney had tempered expectations for a trade agreement, stating that Canada would only accept a deal that serves the best interests of Canadians. He described the ongoing trade discussions as complex and constructive.

Trump has frequently criticized Canada, stating that they need to "pay a fair rate" during a press conference on Thursday. He signed an executive order that night to enforce the increased tariffs. The White House justified the tariff hike by claiming Canada had not adequately addressed the influx of fentanyl and had imposed retaliatory tariffs.

Carney countered that Canada accounts for only 1% of U.S. fentanyl imports and has been actively working to reduce these numbers. In addition to the new tariffs, Canada is also facing existing tariffs on steel, aluminum, and automobiles. Carney assured that the government would strive to minimize the impact of these tariffs and protect Canadian jobs.

Trump's 50% tariffs on semi-finished copper also took effect just after midnight, although raw materials are exempt from this duty. In a separate executive order, Trump announced an increase in tariffs on various other nations, set to take effect in seven days.

The announcement of the tariffs caused market instability on Friday, coinciding with a disappointing U.S. job growth report. Canadian business leaders reacted quickly to the news. Candace Laing, president and CEO of the Canadian Chamber of Commerce, criticized the White House's rationale, calling it "fact-less" and stating, "More fact-less tariff turbulence does not advance North American economic security. Businesses — in Canada and the U.S. — urgently need certainty."

Conservative Leader Pierre Poilievre expressed hope for a resolution that would eliminate all U.S. tariffs on Canada, insisting that the Prime Minister should not settle for less than the previous agreement. Ontario Premier Doug Ford echoed this sentiment, stating, "Canada shouldn’t settle for anything less than the right deal. Now is not the time to roll over."

Experts estimate that 80% to 90% of Canadian goods could potentially avoid the higher tariffs due to CUSMA compliance. However, Michael Dobner, a leader in economics and policy at PricewaterhouseCoopers Canada, noted that not all exporters have completed the necessary paperwork. He warned that businesses relying on parts sourced outside North America could face increased duties.

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, highlighted concerns among small and medium-sized businesses, which may struggle to adapt to the new tariffs. He questioned whether the 35% tariff could be the tipping point for many businesses. Kelly suggested that if Canada remains in a state of uncertainty, the government should consider releasing funds from retaliatory tariffs to support struggling businesses.

Both Kelly and Dobner emphasized that the uncertainty surrounding the tariffs is a significant concern for all industries, potentially stifling investment in Canada. "Generally speaking, even without that increase, there has been a bit of a freeze in investment in Canada," Dobner said.