Canada’s Palestine Stance Creates Trade Turmoil
President Donald Trump has warned Canada that its decision to recognize Palestine could severely damage trade relations with the United States. He said Thursday that if Canada follows through with its announcement, it would be hard to finalize a new trade deal. The talks are already under pressure, with Trump setting a firm deadline of Friday. If no agreement is reached, Canadian goods not protected by the US-Mexico-Canada Agreement may face a 35% tariff starting August 1.
This warning came a day after Canadian Prime Minister Mark Carney said that Canada would formally recognize the State of Palestine at the United Nations General Assembly in September 2025. He said the decision was based on the failure of recent efforts to create a two-state solution and the growing violence in Gaza. But this recognition is not unconditional. Canada says it depends on the Palestinian Authority agreeing to hold elections in 2026 that leave out Hamas, and the future Palestinian state would have to give up weapons.
This move places Canada among a small but growing group of Western nations that are recognizing Palestine. France and the United Kingdom have made similar announcements. French President Emmanuel Macron made his country’s position public on July 24, saying that recognition is a step toward lasting peace. British Prime Minister Keir Starmer also declared that the UK would recognize Palestine by September unless Israel agrees to a ceasefire and stops expanding settlements in the West Bank.
Trump dismissed the French stance as meaningless and gave no attention to the UK’s announcement. Israel has reacted harshly to these developments. Prime Minister Benjamin Netanyahu called them a “gift to Hamas” and warned that the decision would only serve to strengthen Iran’s position in the region.
U.S.-Canada Trade Deal Now at Risk
The political tension over Palestine is now spilling into trade talks. The Trump administration has set a strict Friday deadline for reaching a trade agreement with Canada. Without a deal, Canada will be hit with high tariffs on exports to the U.S., possibly reaching 35%. These threats come as part of Trump’s wider plan to punish countries he believes are not acting in line with U.S. interests. He has already used emergency powers to apply a 25% tariff on Canadian products by linking them to fentanyl trafficking concerns.
Trade experts and banks are warning of serious damage to Canada’s economy. According to TD Economics, about 20% of Canada’s gross domestic product comes from trade with the U.S. New tariffs could cause heavy losses in industries such as steel and aluminum, which have already been hit hard in past trade fights.
Prime Minister Carney tried to keep a positive tone when asked about the trade talks. He said the discussions have been useful but added that a final deal by Friday may not be realistic. Canadian diplomats have said they are focused on getting better terms, not just rushing to meet a deadline set by another country.
Analysis
Trump’s message shows that foreign policy decisions can directly affect trade, especially when the U.S. is involved. His threats are not new, but they show a pattern: if a country takes a position that the U.S. president does not agree with, it can face financial consequences. Canada now finds itself at a crossroads. It must decide whether to stay firm on its Palestine policy or step back to save its economy from heavy losses.
This issue also raises questions about how much influence the U.S. should have over other countries’ decisions. Canada, the UK, and France are trying to take an independent stand on a long-standing international conflict. But their decisions come with real costs, especially when dealing with an unpredictable U.S. administration.
As the deadline draws near, Canada will have to weigh its values against economic pressure. But one thing is clear: trade and foreign policy are now tightly connected, and countries may no longer be able to separate the two.
Sources: france24.com
