Manila: Canada and the United States are making progress towards a possible trade agreement following a lengthy telephone conversation between Canadian Prime Minister Mark Carney and US President Donald Trump. However, the two countries have yet to reach a final agreement, as important differences over tariffs and trade conditions remain unresolved.
Carney announced the progress on Saturday while attending the Association of Southeast Asian Nations (ASEAN) Summit in Manila, Philippines. He said he had held a lengthy and substantive conversation with Trump as both governments continued efforts to resolve their trade dispute.
The latest development raises hopes of improving economic relations between the two neighbouring countries after months of tensions over US tariffs on Canadian products. However, the absence of an agreement means that businesses on both sides of the border continue to face uncertainty over future trade conditions. One of Canada's main concerns is the impact of US tariffs on its automotive industry. Carney has indicated that his government will not accept an agreement that harms the sector. Tariffs on steel and aluminium are also among the important issues affecting negotiations.
The trade dispute intensified in August after negotiations between the two governments broke down over disagreements concerning proposed American trade measures. Carney suspended discussions on August 21 after Washington made changes to its proposed terms, which the Canadian government considered unfair. The United States subsequently imposed additional tariffs of 50 per cent on a range of Canadian products under Section 338 of its Tariff Act, effective August 22. Canada responded by introducing counter tariffs on selected American imports, covering approximately C$27.6 billion in goods.
The disagreement has affected several important industries, including manufacturing, steel, aluminium, automobiles and agriculture. Both countries have closely connected economies, with businesses relying on cross border supply chains to manufacture and distribute products. The two governments also face the challenge of maintaining the Canada United States Mexico Agreement, known as CUSMA in Canada and USMCA in the United States, which also includes Mexico. The agreement entered into force in July 2020 and provides the framework for trade among the three countries.
Its first mandatory joint review is scheduled for 2026, giving the governments an opportunity to assess its operation and consider its future. The agreement remains in force, but continuing disagreements over tariffs have raised concerns about the stability of North American trade. Carney and Trump had also spoken earlier in November about a possible agreement. Both leaders expressed optimism about reaching a mutually beneficial deal, although important differences remained. Negotiations became more intensive in the following days as both governments continued efforts to find common ground.
While seeking a settlement with Washington, Canada is also working to expand its trade relationships with other regions to reduce its dependence on the American market. During his visit to Manila, Carney announced the substantial conclusion of negotiations for a free trade agreement between Canada and ASEAN. The regional organisation brings together 11 Southeast Asian countries and represents a market of nearly 700 million people. The proposed agreement is expected to create new opportunities for Canadian businesses in Southeast Asia. The Canadian government estimates that it could add nearly C$2 billion to the country's economy and create approximately 14,000 jobs. These figures are projections rather than confirmed economic results.
Canada also concluded negotiations for a separate free trade agreement with the Philippines following discussions between Carney and Philippine President Ferdinand Marcos Jr. in Manila. The agreement is expected to be formally signed in 2027 and aims to strengthen trade and investment between the two countries. Canada hopes to triple its exports to the Philippines by 2035.
These developments form part of Canada's broader strategy to expand its international economic partnerships. Carney has set a target of doubling Canadian exports to markets outside the United States by 2035.
Despite these efforts, the American market remains extremely important to Canada. Canadian merchandise exports to the United States accounted for more than 70 per cent of the country's merchandise exports in 2025, highlighting the country's continued dependence on its southern neighbour. The close economic relationship means that Canada cannot easily replace the American market with alternative trading partners. Any prolonged disagreement over tariffs could affect manufacturers, exporters, workers and consumers in both countries.
Carney's latest announcement therefore represents an important step towards renewed negotiations, but the outcome remains uncertain. The two governments have not announced a final agreement, a confirmed timetable for its completion or detailed terms for resolving their outstanding differences. For now, Canada is continuing discussions with the United States while pursuing new trade opportunities in Asia and other international markets. The success of these efforts could play an important role in shaping the country's economic relationships and future trade strategy.