Trump to EU: Drop Canada Deal or Face Massive Tariffs

US President Donald Trump warned Wednesday that he would impose "very severe" tariffs or halt trade with the European Union if the bloc moves forward with a proposal to grant Canada its first "partner member" status [242895].

The threat marks a sharp escalation in the trade war between Washington and its closest allies. Canadian Prime Minister Mark Carney has been actively courting Europe as relations with the United States deteriorate. Carney traveled to Europe to seek a closer relationship with the EU, aiming to give Canadians more freedom to work and study on the continent [242063].

Last week, EU diplomats from all 27 member states agreed unanimously to strengthen trade and other ties with Canada, despite its conflict with Trump [242172]. Carney told the Financial Times that ten EU countries still need to ratify the trade agreement signed nine years ago. EU-Canada trade in goods reached 82 billion euros in 2025, making the EU Canada's second-largest trading partner [242172].

Carney has stood firm against Trump, who once called Canada "the 51st state" of the U.S. "We were not willing to compromise Canada's sovereignty," Carney said. He promised to match new U.S. tariffs "dollar for dollar" [242172].

The Canadian leader is also pursuing a "unique alliance" with the European Union, signaling Ottawa's intention to move away from Washington as the trade war intensifies [242141]. Canada is buying German submarines and considering Swedish fighter jets as it pivots toward Europe [242381].

Canada has asked the EU to explore a "special status" that would create a privileged partnership. Other countries, including Australia, have said they might follow the same path as relations with the U.S. worsen [242172].

Meanwhile, Canadian exports to China rose 30.1 per cent in the first half of 2026, reaching $21.74 billion, according to data analyzed by the Canada-China Business Council and the University of Alberta's China Institute. Canadian imports from China fell 5.8 per cent to $44.86 billion [240924].

China is also making its own trade moves. Beijing is expected to push for a sweeping Pacific Rim trade agreement when it hosts the Asia-Pacific Economic Cooperation (Apec) forum in November. The proposed deal, known as the Free Trade Area of the Asia-Pacific (FTAAP), would include all 21 Apec members — even the United States [242505].

Analysts say the move would score diplomatic points for Beijing even if the deal fails. Washington is likely to resist, making a final agreement hard to reach [242505].

The broader global trade landscape is shifting. The European Union, China, and the United States are moving away from negotiation and focusing on enforcement. Countries are using tariffs, export controls, and sanctions to protect their interests instead of settling disputes through the World Trade Organization [242466].

The EU recently launched new tools to counter economic pressure. China has tightened rules on critical technology exports. The US continues to expand restrictions on advanced semiconductors [242466]. These actions are about power and securing supply chains, not just trade [242466].

Carney also wants to create a global body to oversee artificial intelligence (AI) and ensure its safe development. European Parliament President Roberta Metsola announced that the Parliament will open an office in Ottawa to strengthen ties with Canada [242172].

The EU and Canada are negotiating expanded agreements in trade, defense, critical minerals, energy, financial systems, and visa liberalization. They will meet in Montreal in late October to speed up talks [242172].