Canada may have to accept a baseline tariff to maintain access to the US market, Finance Minister François-Philippe Champagne said, in comments following President Donald Trump’s recent State of the Union address. Trump suggested that tariffs could eventually replace income taxes as America’s primary source of revenue, a stance that has raised concerns among trading partners.
Speaking to reporters in Ottawa, Champagne acknowledged that all countries face costs to sell goods in the US, but said Canada pays the lowest “price” among global trading partners. “I think it is pretty well understood now in the world that the view of the American administration is that there’ll be a price to access the American market,” he said.
The remarks follow US Trade Chief Jamieson Greer, who told CBC that Canada may need to accept “some level of higher tariff” in exchange for broader access to American markets, including products like dairy. Canada has exemptions under the US-Mexico-Canada Agreement (USMCA) but still faces higher tariffs on steel, aluminium, and softwood lumber.
Greer indicated that negotiations could be constructive if Canada agrees to certain tariffs while gaining better market access. Champagne’s comments appear to signal Ottawa’s willingness to explore such arrangements, even as trade tensions with the US continue to ripple through Canadian industries.
The shift comes after the US Supreme Court struck down Trump’s sweeping 2025 tariffs policy in a 6-3 decision last Friday, ruling the president had exceeded his authority. In response, Trump imposed a new 10% global tariff under Section 122 of the 1974 Trade Act, a rarely used law allowing the president to enforce temporary tariffs of up to 15% for 150 days before Congress must act.
Trump defended the measure in his State of the Union, describing tariffs as a way to ease the financial burden on American citizens. “And as time goes by, I believe the tariffs, paid for by foreign countries, will, like in the past, substantially replace the modern-day system of income tax, taking a great financial burden off the people that I love,” he said.
Canada’s largest export market remains the US, accounting for roughly 75% of its shipments abroad. In response to rising uncertainty, Canadian policymakers, including Prime Minister Mark Carney, have emphasized the need to diversify trade, aiming to double non-US exports within the next decade, especially in metals and automotive sectors.
While Canada navigates the new tariff landscape, Champagne stressed that maintaining access to the US market is critical. He described current discussions as part of an ongoing dialogue to balance tariffs with market opportunities, highlighting Ottawa’s pragmatic approach to evolving trade pressures.
