Trump ramps up trade war with Canada over Palestine as deadline looms

US President Donald Trump intensified his trade war with Canada a day before his August 1 deadline for a tariff agreement, saying it will be “very hard” to make a deal with Canada after it gave its support to Palestinian statehood.

Trump is set to impose a 35 per cent tariff on all Canadian goods not covered by the US-Mexico-Canada trade agreement if the two countries do not reach an agreement by the deadline.

“Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them,” Trump said on Truth Social.

Canadian Prime Minister Mark Carney previously said tariff negotiations with Washington had been constructive, but the talks may not conclude by the deadline.

Talks between the two countries were at an intense phase, he added, but a deal that would remove all US tariffs was unlikely.

Meanwhile, the global tariff regime is facing a crucial court challenge. From 2am Friday (AEST), eleven judges in Washington DC will hear arguments from the Trump administration and two small businesses who say that many of his import duties are illegal.

The businesses sued the president over his enacting the International Emergency Economic Powers Act of 1977. All of the White House’s tariffs on major trading partners have been enacted under that law.

Canada is the second-largest US trading partner after Mexico, and the largest buyer of US exports. It bought $US350 billion ($540b) of US goods last year and exported $US413b to the US, according to US Census Bureau data.

Canada is also the top supplier of steel and aluminium to the United States, and faces tariffs on both metals as well as on vehicle exports.

In June, Carney’s government scrapped a planned digital services tax targeting US technology firms after Trump abruptly called off trade talks saying the tax was a “blatant attack”.

Carney followed France and Britain as he said on Wednesday that his country was planning to recognise the State of Palestine at a meeting of the United Nations in September.

In announcing the decision, Carney spoke of the reality on the ground, including starvation in Gaza.

“Canada condemns the fact that the Israeli government has allowed a catastrophe to unfold in Gaza,” he said.

Israel and the United States, Israel’s closest ally, both rejected Carney’s comments.

Carney’s office did not immediately respond to a request for comment on Trump’s post.