‘Oh, Canada’ — Trump Says Palestinian Recognition Makes Trade Deal ‘Very Hard’

U.S. President Donald Trump said in the early hours of Thursday that it would be “very hard” for his administration to agree to a trade deal with Canada, after Prime Minister Mark Carney said he would recognize the Palestinian state in September.

"Wow! Canada has just announced that it is backing statehood for Palestine," he posted on Truth Social. "That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!"

A potential disagreement over Palestine is likely to flare up tensions again between the two North American neighbors amid ongoing trade negotiations. Trump had earlier threatened this month to impose 35% tariffs on all non-compliant Canadian exports under the U.S.-Mexico-Canada trade treaty, unless the two sides agreed to a deal.

Retail sentiment on Stocktwits about iShares MSCI Canada ETF was in the ‘bearish’ territory at the time of writing.

Trump’s warnings come after Canada joined a list of countries, including the UK and France, that have pledged to recognize the Palestinian state as Israel’s war on Gaza continues to claim lives. Carney reportedly stated that the recognition was contingent upon democratic reforms and Hamas's non-participation in any future elections.

Currently, the U.S. applies a 25% tariff on Canadian imports that don’t comply with the USMCA. Canadian goods are also subject to Trump’s sectoral tariffs, such as 50% levies on steel and aluminum, as well as a 25% tariff on vehicles assembled in Canada.

Carney had also said on Thursday that negotiations are still ongoing and may not conclude before the Aug. 1 deadline. The bilateral trade between the two countries stood at $762.1 billion in 2024. 

Also See: Lutnick Says US Struck Trade Deals With Thailand, Cambodia Following Ceasefire — But Details Unclear

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