Concession Carney faces his Neville Chamberlain moment

Fen Osler Hampson is Chancellor’s Professor at Carleton University and co-chair of the Expert Group on Canada-U.S. Relations.

As U.S. President Donald Trump’s Aug. 19 deadline approaches, Prime Minister Mark Carney is making concessions to keep looming tariffs at bay. This could prove to be a defining moment in deciding the fate of the United States-Mexico-Canada Agreement, for the choices are stark: appeasement or defiance, with little room to maneuver in-between.

The Globe and Mail has reported that a deal may be in the making in which the U.S. lowers – but does not remove – duties on steel and aluminum and perhaps autos and forest products. In exchange, Canada would remove retaliatory tariffs on autos and take action on other U.S. irritants such as alcohol and dairy.

The devil is in the details, and the haggling over tariff rates and quotas, but there can be little doubt that Canada is going to have to concede a lot before the President and his tariff-hungry team are mollified.

Though the historical analogy should not be overstated, Mr. Carney’s position is much like former British prime minister Neville Chamberlain’s at Munich in 1938. Mr. Chamberlain and his French counterpart had conceded the Sudetenland of Czechoslovakia to Germany to appease Chancellor Adolf Hitler and halt Germany’s expansion. As it was with Mr. Chamberlain then, Mr. Carney is playing with a weak hand and he knows it.

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Dominic LeBlanc, the minister responsible for Canada-U.S. trade, has tried to reassure Canadians that his latest round of talks with his U.S. counterpart, Jamieson Greer, were “constructive and detailed.” Mr. Trump’s spin was characteristically more pointed, ad hominem and possibly closer to the mark. He described the talks as “nasty” and Canada’s leadership as “nasty.”

It is clear what the Americans want from us: major concessions on all irritants and a stand-down on retaliation, plus the rollback of Canada’s digital content and platform regulations et cetera. And they want Canada to make those concessions now before turning to broader questions about the USMCA’s future and the degree to which it will be governed by the U.S.’s new tariff regime.

Canada’s own position is also clear. It wants the U.S. to lift its punitive tariffs on Canadian steel, aluminum, lumber, passenger vehicles, trucks, auto parts and kitchen cabinets and furniture before discussing mutual concessions on these and other issues, which is what Mr. LeBlanc meant when he stated recently that Canada wants a “comprehensive deal that addresses sectoral tariffs.”

But Canada’s problem is not just that Mr. Trump’s idea of a negotiation is to ask for the moon and give little upfront in return. Mr. Trump also thinks the Prime Minister is weak and can be rolled over just like the Europeans, British and Japanese in their negotiations with the Americans.

Mr. Carney hasn’t helped himself either by capitulating to Mr. Trump on the digital services tax last year and, more recently, on sharing toll revenues from the Gordie Howe International Bridge. Neither has he done so with his I-said-it-but-I-didn’t-really-mean-it apology delivered in a private phone call to U.S. Treasury Secretary Scott Bessent after his blistering global “rupture” speech at Davos.

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Mr. Carney’s trade diversification strategy aimed at doubling Canada’s non-U.S. trade by 2035 will take many years to bear fruit. Too much is at risk when three-quarters of Canada’s trade is dependent on a single market.

Accordingly, like Mr. Chamberlain – as some revisionist historians have argued – it appears Mr. Carney believes his best hope is to avoid a doomed trade war with an erratic leader. Instead, Mr. Carney pursues an accommodationist course long enough for Canada to diversify its economic relationships, much as Mr. Chamberlain bought time for Britain’s rearmament.

If an agreement is reached before the Aug. 19 deadline, or if talks are sufficiently productive that Mr. Trump extends it to allow time to reach a deal, Canada will avoid a stay of tariff execution. However, Mr. Carney’s political challenge will not end there. He will have to defend his concessions, likely many of them, to a Canadian public that believes he should be going “elbows up” with Mr. Trump.

But the Munich analogy underscores a bigger problem for Mr. Carney. Whatever is agreed to in current talks will likely take the form of bilateral side letters, which are not embedded in the text of the USMCA treaty itself. Those side letters will mean little to a President whose word is not his bond. Mr. Carney also runs the risk that the next speech he gives, or action his government takes, will invite more punitive tariffs. There are some leaders, as Mr. Chamberlain learned, who cannot be appeased.