Two groups representing businesses in Ontario and Michigan are urging Canada and the U.S. to get a trade deal done in order to avoid prolonged instability.

“Prolonged instability could have serious consequences for key sectors, from automotive and advanced manufacturing to agriculture and logistics,” a joint statement Friday from the Ontario and Michigan chambers of commerce said.

“This is not just a trade story, it’s a North American competitiveness crisis. The chambers are calling on both governments to return to the negotiating table.”

The statement comes after the two countries failed to come to some sort of agreement by an Aug. 1 deadline.

U.S. President Donald Trump signed an executive order on Thursday boosting tariffs from 25 per cent to 35 per cent on Canadian goods that don’t comply with the Canada-U.S.-Mexico Agreement (CUSMA).

Michigan and Ontario form one of the largest trade corridors between the two countries. The two jurisdictions are largely connected via the integrated auto sector.

In addition to the 35 per cent tariffs on non-CUSMA compliant goods, Trump has also slapped a 25 per cent levy on the non-U.S. portion of assembled vehicles. The U.S. has also imposed 50 per cent tariffs on steel and aluminum imports from all countries.

Prime Minister Mark Carney released a statement just past midnight on Friday saying Canada will continue to work toward a deal while focusing on providing supports for impacted industry and diversifying trade.

“Canada will be our own best customer, creating well-paying careers at home, as we strengthen and diversify our trading partnerships,” the statement said.

Trump’s order cites “Canada’s lack of co-operation in stemming the flood of fentanyl and other illicit drugs across our northern border” — even though Canada accounts for a small percentage of drug seizures entering the U.S.

But a White House official gave CBC News a different explanation for the lack of an agreement with Canada, saying on background that Canada “has repeatedly demonstrated a lack of seriousness in trade discussions as it relates to removing trade barriers.”

Trump gave Mexico, which accounts for the majority of drug seizures at the U.S. border, a 90-day extension of its current tariff regime with the goal of signing a new deal during that period.

‘No deal better than a bad deal’

Other Canadian business groups also expressed concerns about the lack of an agreement, but say it’s better that Canada take its time rather than accept a bad deal.

The Canadian Chamber of Commerce says it feels spending a little bit more time on crafting the right deal is well worth the wait because it will deliver lasting benefits.

However, the group also feels businesses in Canada and the U.S. urgently need more certainty.

Dan Kelly, the president and CEO of the Canadian Federation of Independent Business (CFIB), blasted the U.S. administration for its tariff rationale.

“The hike in U.S. tariffs to 35 per cent will harm small businesses on both sides of the border. The fentanyl rationale is even more ridiculous than the decision itself,” Kelly said in a statement.

“CFIB supports the view that no deal is better than a bad deal, but the lack of resolution means small firms will not be able to plan for the future or continue to put off difficult choices.”

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Kelly’s sentiment was echoed by the United Steelworkers union on Friday.

“While we’re disappointed an agreement wasn’t reached to end this trade war, the worst outcome would have been a deal that locked in permanent damage to our economy,” national director Marty Warren said in a statement.

Warren encouraged Ottawa to take retaliatory action if necessary.

“This fight is far from over. The federal government must remain steadfast to secure the right deal for the Canadian economy and Canadian workers and must not accept anything less.”

Premiers urge Ottawa to stand its ground

Ontario Premier Doug Ford called the tariff increase concerning and said Ottawa should retaliate with 50 per cent tariffs on U.S. steel and aluminum.

“Canada shouldn’t settle for anything less than the right deal,” Ford said on X Thursday night. “Now is not the time to roll over. We need to stand our ground.”

Quebec Premier François Legault called Trump’s latest move “disappointing” and argued that it will hurt Americans.

“Recent events highlight the importance we must place on diversifying our markets and increasing our economic autonomy,” Legault wrote on X in French.

“We are in contact with the federal government and other provinces regarding the next steps. Discussions with the American administration must continue. In any case, we will defend the interests of Quebecers.”

New Brunswick Premier Susan Holt said Canada should still push for a good deal.

“Canada has what the world wants, and we should not settle for anything less than the best deal for New Brunswickers,” she wrote Friday on X.

“Canada is coming together like never before to support our local businesses, workers and build a strong and resilient economy. We have your back.”