Canada among Trump's ‘friendly’ countries — for now — as next tariff deadline looms

This composite image shows Prime Minister Mark Carney, left, in Kitchener, Ont. on March 26, 2025 and U.S. President Donald Trump, right, in Washington on March 26, 2025. THE CANADIAN PRESS/Frank Gunn/AP - Pool

MONTREAL — Uncertainty reigns ahead of a looming U.S. tariff deadline next week, with businesses stuck in a holding pattern that has halted capital investment, hiring and financial forecasts at some firms amid a trade war where the next steps — and even who counts as a friend — remain foggy.

U.S. President Donald Trump has pledged sweeping duties on imports from across the globe, including Canada, starting this Wednesday. But new details emerge almost daily from a White House that has changed, delayed or walked back much of its tariff plans over the past two months, including after a Friday phone call between Trump and Prime Minister Mark Carney described by the Liberal leader as “constructive.”

“Nobody knows what the heck is going on,” said Goldy Hyder, CEO of the Business Council of Canada.

“You’re literally dealing with an environment where things are being made up as they go.”

The U.S. has already hit Canada and Mexico with 25 per cent levies on steel and aluminum as well as goods that are not compliant with the North American free trade pact. The pause on tariffs for items that do comply is set to expire on April 2 — but the extent and severity of that duty remains in doubt.

A senior Ontario government source told The Canadian Press that, as of Thursday, Canada was poised for inclusion in a group of so-called “friendly” countries that would receive milder tariff treatment.

U.S. trade representatives informed their Ontario counterparts that Trump has carved out two other categories — one for “medium” tariffs and a third simply dubbed “China” — according to the source, who was not authorized to speak publicly on the matter.

The details of those groupings are unclear. That fuzziness adds to a broader atmosphere of uncertainty ushered in by ever-evolving tariff threats that has chilled investment and frozen decisions on everything from hiring to marketing at companies across the country.

“They’re not starting that new line, they’re not planning that new expansion. They’re cancelling the new brand or the new product they were going to launch in the U.S. or Canada,” said Matthew Holmes, head of public policy at the Canadian Chamber of Commerce.

“The constant drumbeat of tariffs — it’s going to be on this date, no it’s going to be on that date ... now we’re doing a surprise one this week, just cause — is unpredictable and stress inducing.”

The “one this week” referred to Trump’s latest announcement of 25 per cent tariffs on imported vehicles. Catching Canada off-guard, the tariffs are set to take effect on April 3, with levies on auto parts slated for May 3 or later.

Ontario Premier Doug Ford said Thursday that U.S. Secretary of Commerce Howard Lutnick told him Canada would face a different rate, but the timing is unclear. Vehicles with 50 per cent U.S.-made parts would not be subject to tariffs, Ford said.

A kind of paralysis has already set in.

“Just over two months ago, it was before Trump and there was a shortage of workers,” said Dennis Darby, CEO of the Canadian Manufacturers and Exporters industry group. “Now nobody’s hiring. In some cases, they’re cutting shifts.”

Since early March, Canada has imposed 25 per cent tariffs on about $60 billion worth of American goods, and threatened tariffs on $95 billion more if the U.S. does not back down.

In the short term, shippers have raced to beat the shifting tariff deadlines, prompting a surge in cross-border cargo traffic. Freight volumes rose 25 per cent year-over-year in January and 58 per cent in February, according to transport data firm Loadlink Technologies.

“We saw this in the first Trump presidency as well. There was a huge uptick in business before the tariff, and then the tariff hit and we went off a cliff,” said Holmes.

But numerous economists and the Bank of Canada have predicted a recession if sweeping tariffs take effect for the year.

The promise of negotiations for a “new economic and security relationship” announced Friday by Prime Minister Mark Carney after a phone call with Trump offers some hope for stability. The talks, which Carney said will start after the federal election, could forestall further tariff threats.

But the economic sword of Damocles dangling over the continent has already harmed companies, regardless of which tariffs stick around or come to pass, Holmes said.

“The damage is done just in the threatening of the tariff itself. Not the full extent of the damage; any day we keep our trade relationship open is a good day,” he said.

“But it paralyzes investment decisions, it adds to prices, there are already job losses, there are already cancelled contracts.”

TFI International, the country’s biggest trucking company, has not been able to provide a financial forecast for the year due to what the CEO called a “very foggy” situation. This past week, BRP Inc. suspended its 2025 outlook for the same reason. The Ski-Doo maker produces most of its powersports vehicles in Mexico and Canada but derives the bulk of its revenue from the U.S., where they’re imported.

The distrust sowed by both Trump’s threats and whether he will follow through opens the door to economic tumult in the near term, said Preetika Joshi, assistant professor at McGill University’s Desautels Faculty of Management.

“It has been shown time and again that you really can’t rely on what he’s saying,” she said.

“Maybe we’ll be fine in four years from now, but I think the path there will be turbulent. We just have to fasten our seatbelt and, honestly, nobody really knows what the next weeks, months are going to bring.”

This report by The Canadian Press was first published March 29, 2025.

With files from Liam Casey in Toronto

Christopher Reynolds, The Canadian Press