by Worthy News Washington D.C. Bureau Staff
(Worthy News) – President Donald Trump warned Thursday that reaching a new trade agreement with Canada may now be unlikely after Canadian Prime Minister Mark Carney announced his government’s backing the recognition of a Palestinian state. The move, unveiled ahead of September’s United Nations General Assembly, immediately escalated tensions between the longtime allies, injecting geopolitics into sensitive economic negotiations.
“Wow! Canada has just announced that it is backing statehood for Palestine,” Trump wrote on Truth Social. “That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!”
Carney’s announcement came just two days before Trump’s August 1 deadline for nations to strike updated trade deals with the United States or face sweeping new tariffs. Under Trump’s plan, countries without a finalized agreement would see their exports hit with a 35% tariff–part of a broader strategy the White House is calling “Liberation Day.”
Canada is the third major U.S. ally in recent weeks to announce support for Palestinian statehood. France was the first to commit to recognition, followed by the United Kingdom, which conditioned its move on Israel agreeing to a Gaza ceasefire and allowing humanitarian aid into the enclave. More than 140 countries already recognize Palestinian statehood, though the Palestinian Authority remains a non-member observer at the UN.
In his statement, Carney defended Canada’s longstanding commitment to a two-state solution. “An independent, viable and sovereign Palestinian state living side by side with the State of Israel in peace and security has always been our vision,” he said. He added that the decision was reached after Palestinian Authority President Mahmoud Abbas pledged to hold general elections in 2026 from which Hamas would be excluded, and to pursue demilitarization.
Canada emphasized its continued support for Israel, insisting that Hamas “must disarm” and that Canada “will always steadfastly support Israel’s existence.” Nevertheless, Israel’s Foreign Ministry swiftly condemned the recognition, calling it a “reward for Hamas” and warning it would “harm efforts to achieve a ceasefire in Gaza and a framework for the release of hostages.”
In Washington, U.S. officials expressed frustration. Special Envoy to the Middle East Steve Witkoff is scheduled to arrive in Israel Thursday to continue discussions over Gaza and regional stability. Trump, for his part, has indicated that more humanitarian aid centers will be established in the strip, though he has maintained a hard line against any perceived concessions to terrorist organizations.
On trade, Prime Minister Carney remained cautious. Speaking Wednesday in Ottawa, he said discussions with Washington remain ongoing but acknowledged a deal may not be reached before the looming deadline. “We are pursuing a deal that will be in the best interest of Canadians,” he said. “Our objective is not to reach a deal whatever it costs.”
Canada, which sends about three-quarters of its exports to the U.S., faces significant risk from the threatened tariffs. Key sectors such as automotive, energy, and agriculture could be hit hard if no agreement is reached. Yet Carney appeared to signal that economic pressure would not sway Ottawa’s foreign policy decisions, saying the two nations must navigate “a broad variety” of issues, including defense and security cooperation.
With time running out and diplomatic lines tightening, the intersection of trade and geopolitics between the U.S. and Canada now appears more complicated than ever.
Copyright 1999-2025 Worthy News. This article was originally published on Worthy News and was reproduced with permission.
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