In a recent public statement, former Bank of England Governor Mark Carney suggested that any forthcoming trade agreement between the United States and Canada is likely to feature certain targeted tariffs. Carney, who has also served as Governor of the Bank of Canada and is now a prominent voice in global finance and economic policy, emphasized that evolving economic dynamics, geopolitical pressures, and industrial strategy may require both countries to revisit assumptions about fully tariff-free trade.
Though Carney did not specify particular industries or products that might be impacted, his remarks suggest a departure from the enduring concept of total free trade between the two countries. Rather, he emphasized a possible requirement for “smart tariffs” or selective trade limitations intended to safeguard strategic sectors, address carbon output, or secure supply chain robustness, particularly in crucial fields like energy, manufacturing, and clean technology.
This view mirrors a wider international movement where nations are re-evaluating traditional models of trade liberalization, shifting towards more sophisticated economic alliances that emphasize national priorities, environmental objectives, and economic stability. Carney’s comments, made at a forum on enhancing North American competitiveness, highlight how both Canada and the United States are dealing with a more intricate global trade landscape influenced by hurdles such as inflation, climate change, digital innovation, and geopolitical stress.
The commercial ties between Canada and the United States rank among the most significant and complex globally. Daily, merchandise and services valued at billions traverse the border, fueling industrial innovation, job opportunities, and economic expansion in both nations. Although the United States-Mexico-Canada Agreement (USMCA), which succeeded NAFTA in 2020, advanced trade regulations to align with today’s economic landscape, there’s an increasing awareness that emerging challenges require revised approaches.
Carney’s comments suggest that a future iteration or renegotiation of the USMCA—or an entirely new bilateral arrangement—may need to account for shifts in industrial policy. For example, both Canada and the U.S. are investing heavily in clean energy technologies, including electric vehicles (EVs), critical minerals, and renewable energy infrastructure. Tariffs could be used strategically to support domestic production, reduce reliance on non-allied countries, and meet ambitious climate targets.
Also, worries about labor standards, environmental safeguards, and online commerce have led to demands for a trade framework that emphasizes values. Instead of concentrating just on reducing expenses and removing tariffs universally, contemporary trade policy might aim to align with wider national goals, like equitable labor practices, climate resilience, and data governance. In this scenario, thoughtfully implemented tariffs could function as instruments to equalize competition and secure economic justice.
Carney also referred to the changing function of international bodies and the weakening of multilateralism in trade regulations. With the World Trade Organization (WTO) encountering more threats to its power, nations are more frequently opting for regional or bilateral deals to protect their economic priorities. The growing importance of industrial strategy in both Washington and Ottawa suggests a future in which trade will focus less on complete liberalization and more on specific partnerships and controlled rivalry.
While some business leaders and economists warn that introducing new tariffs could disrupt supply chains or increase consumer costs, others argue that such measures may be necessary to support long-term economic resilience. Recent global events—including the COVID-19 pandemic, supply shortages, and geopolitical conflicts—have revealed vulnerabilities in international trade systems that many governments are now seeking to address through domestic investment and selective protectionism.
For Canada, the potential shift towards embracing particular tariffs in trade talks could symbolize a strategic balance. While Canada is strongly dedicated to free trade and multilateral collaborations, evidenced by its recent agreements with the European Union and Pacific countries, it also needs to consider the substantial economic influence of the United States, its primary trading ally. Consequently, Ottawa must carefully align with any alterations in U.S. trade policies, particularly under governments that emphasize local manufacturing and energy protection.
Carney’s remarks also have implications for climate-related trade mechanisms, such as carbon border adjustments. These tools, which impose tariffs on imports based on the carbon intensity of production, are gaining traction in Europe and are being discussed in North America as a way to prevent “carbon leakage”—the outsourcing of pollution to countries with weaker environmental regulations. In such cases, tariffs would serve not as protectionist instruments but as environmental safeguards designed to promote global climate accountability.
In the months ahead, policymakers, industry leaders, and trade experts in both countries are likely to explore how selective tariffs might be integrated into future trade frameworks without undermining the overall flow of goods and services across borders. Transparency, predictability, and collaboration will be essential to avoid sparking trade disputes or retaliatory measures.
From a political standpoint, the suggestion that tariffs could re-emerge as part of North American trade policy is likely to provoke a wide range of reactions. Free trade advocates may view the development as a step backward, while proponents of economic nationalism and strategic autonomy may see it as a necessary evolution. For elected officials, the challenge will be to strike a balance between economic integration and national priorities—particularly in sectors considered vital to future prosperity and security.
Mark Carney’s indication that a future U.S.-Canada trade deal may include targeted tariffs reflects a growing shift in how countries conceptualize international commerce. Rather than relying solely on free-market principles, emerging trade strategies may blend openness with selective protection to adapt to an increasingly complex economic and geopolitical landscape. As negotiations continue and conditions evolve, both nations will need to carefully consider how to use tariffs and other tools to safeguard their interests while maintaining the deep economic ties that have long defined the U.S.-Canada relationship.
