Trump Uses Canada’s Palestine Recognition to Pressure Trade Talks

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President Donald Trump has warned that Canada’s recent recognition of a Palestinian state could derail ongoing trade negotiations between the two nations. He threatened to impose a 35 percent tariff on Canadian exports if a new agreement is not reached by the end of the week.

In a post on social media, Trump condemned the Canadian government’s foreign policy move, claiming it rewarded extremist groups. The president did not issue similar threats when other allies, such as the United Kingdom and France, took comparable positions. His remarks mark a significant escalation in linking diplomatic disagreements to economic retaliation.

Prime Minister Mark Carney defended Canada’s stance, stressing that the decision to recognise Palestinian statehood is conditional on reforms by the Palestinian Authority and does not imply support for any armed factions. He also reiterated Canada’s sovereign right to shape its foreign policy independently. While expressing regret over Washington’s response, Carney affirmed that Ottawa is actively expanding trade ties with other partners to reduce economic exposure.

The tariff threat adds to an already tense trade environment between the U.S. and Canada. Trump has recently raised existing duties from 25 to 35 percent on certain Canadian goods, citing a lack of action on fentanyl smuggling as justification. Canadian sectors such as steel, lumber, and automotive manufacturing are now bracing for further financial strain.

This tactic follows a broader pattern in Trump’s trade policy, where security and diplomatic disputes are increasingly tied to economic measures. Brazil and India have faced similar threats, raising concerns among analysts about the politicization of trade tools traditionally used for addressing imbalances or protecting domestic industries.

As the United States-Mexico-Canada Agreement (USMCA) heads toward a scheduled review next year, Canadian officials face mounting pressure to navigate both economic and diplomatic tensions. Any failure to resolve the current dispute could have lasting consequences for bilateral trade, affecting jobs, investment, and supply chains across both countries.

The situation reflects a growing rift in a relationship long defined by economic integration and shared Western alliances. Canadian leaders are now tasked with defending national policy decisions while safeguarding critical export industries from sudden shifts in U.S. tariff strategy.