‘An existential economic problem for the country’: Former Canadian policy advisor on trade war negotiations

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The best-case scenario for Canada is to secure a reduced tariff rate as Ottawa negotiates with Washington on sectors not involved in a free trade agreement, according to a former Canadian policy advisor.

Prime Minister Mark Carney returned to Ottawa Wednesday after meeting with U.S. President Donald Trump Tuesday with no deals in place to remove tariffs on Canadian goods.

“Sometimes, it’s easy to take for granted what you already have,” Gerald Butts, vice chairman at Eurasia Group told BNN Bloomberg in a Wednesday interview.

Butts joined senior business leaders, top policymakers, and experts from both sides of the border at the 2025 US-Canada Summit, hosted by BMO and Eurasia Group, in Toronto Wednesday. The summit offered an opportunity to understand market dynamics, network with industry leaders and discuss the future of the U.S.-Canada relationship.

“There are a lot of Canadians employed in sectors, like steel and aluminum,” said Butts. “Those sit outside the agreement and those are the tariffs the government is currently negotiating to reduce.”

Butts was a policy advisor with Prime Minister Justin Trudeau’s administration. He was instrumental in the negotiation of that Canada-United States-Mexico Agreement (CUSMA) that replaced the North American Free Trade Agreement.

“We were keenly aware every day that it was an existential economic discussion for Canada, and that literally millions of Canadians depend on it for their employment,” said Butts. “There’s no bigger economic policy problem that the government has to solve than how you come to terms with the United States for a successor agreement for USMCA.”

Tariffs have already been imposed on countries such as China, South Korea, India, Ireland, Japan and France. Japan’s tariffs were reduced to 15 per cent from a previous 25 per cent, which the two sides agreed to on July 22.

Butts said it’s important to put in context that Japan does not have a comprehensive free trade agreement with zero tariffs on major sectors.

“Canada already has the lowest tariff trading relationship with the United States of any country on earth, and we certainly wouldn’t want to trade places with countries like Japan,” said Butts.

He said Canada needs to negotiate the best agreement impacted sectors, keeping in mind that there will always be tariffs as long as Trump is president.

“I don’t think there’s been a more difficult time, certainly in my lifetime, to be Prime Minister of Canada,” said Butts. “This is an existential economic problem for the country, and millions of Canadians are literally depending on the outcome for their livelihood.”

He said the relationship with the United States is complex as the two countries share a 9,000-kilometre border and trillions of dollars in trade. He said discussions take time.

“You can’t expect everything to be complete in one day, but my assessment was, that was progress,” said Butts.