President Donald Trump has warned that the United States could impose additional tariffs or restrict trade with Europe after the European Union proposed a closer relationship with Canada. European Commission President Ursula von der Leyen said the EU wanted to open the door for Canada to become its first “associate member,” building on the existing CETA trade agreement through a broader “Alliance for the Future.” The proposed partnership would focus on trade, economic security, energy, technology and other areas while also emphasizing shared democratic values. Trump described the proposal as “laughable” and said that if he considered it a hostile act, the U.S. could respond with “very serious tariffs” or stop trading with Europe in some areas.

The development comes as Canada works to reduce its dependence on the United States following months of trade tensions. Prime Minister Mark Carney has welcomed closer cooperation with Europe and said Canada should be free to choose its international partnerships. Canada currently sends roughly 70% of its exports to the United States, making the American market extremely important to its economy. Carney has instead promoted stronger relationships with Europe in areas including critical minerals, artificial intelligence, defense, energy and trade. Canadian officials have stressed that associate membership would not mean becoming a full EU member, and the details of any future arrangement are still being discussed. The EU and Canada are expected to continue talks about how the proposed partnership could work, while Trump’s latest comments add another layer of uncertainty to the already strained trade relationship between Washington and Ottawa.