Prime Minister Mark Carney and U.S. President Donald Trump agreed Tuesday to intensify trade negotiations following a threat of steep tariffs.

The agreement comes as Canada faces the prospect of a severe economic shock that could disrupt bilateral trade and destabilize North American supply chains.

On Monday, President Trump threatened to impose 50 percent [1] tariffs on billions of dollars [2] of Canadian goods. The move prompted an immediate response from Ottawa and various provincial leaders. In Charlottetown, P.E.I., several premiers gathered to react to the potential economic impact.

Carney said he spoke with Trump on July 21, 2026 [3], to address the situation. The two leaders reached a consensus to ramp up the pace of their discussions to prevent a full-scale trade war.

"I have spoken with President Trump and we agreed to intensify trade talks," Carney said.

The Prime Minister emphasized that Canada is prepared for multiple outcomes depending on the results of these accelerated negotiations. He noted that the talks would not be limited to the U.S. alone, as the broader regional trade framework remains a priority.

"We are committed to intensifying trade negotiations with the United States and Mexico," Carney said.

Despite the agreement to talk, the Canadian government remains cautious. Carney said the administration is weighing its response should the U.S. proceed with the tariffs despite the ongoing negotiations.

"We will intensify our trade talks and consider all options if the tariffs go ahead," Carney said.

The tension follows a pattern of tariff-based diplomacy from the Trump administration, leaving Canadian officials to balance diplomatic cooperation with the need to protect domestic industries from sudden price hikes.

“"I have spoken with President Trump and we agreed to intensify trade talks."”

This development signals a high-stakes diplomatic effort to preserve the economic stability of the US-Canada relationship. By agreeing to 'intensify' talks, both leaders are attempting to find a negotiated settlement that allows the U.S. to claim a victory in trade terms while allowing Canada to avoid the devastating impact of a 50% tariff on its exports.