OTTAWA — Canadian and American negotiators are heading into a decisive final round of talks as they attempt to prevent new 50 per cent U.S. tariffs on approximately $30 billion worth of Canadian goods from taking effect just after midnight.
Canada-U.S. Trade Minister Dominic LeBlanc and Canada’s chief trade negotiator Janice Charette are leading Ottawa’s efforts in Washington. LeBlanc is expected to hold further discussions with U.S. Trade Representative Jamieson Greer, while Prime Minister Mark Carney is also expected to speak directly with U.S. President Donald Trump by telephone before the deadline.
However, the timing of the discussions had not been finalized as of early Tuesday afternoon, according to sources familiar with the negotiations, leaving open the possibility that the talks could still fail to produce an agreement.
If no deal is reached, Trump’s new tariffs are scheduled to take effect Wednesday, August 19. Canadian liquor producers, hockey-equipment manufacturers, wood and paper companies and numerous other exporters could face substantially higher costs when selling products into the United States.
The Trump administration says the new tariffs are a response to Canadian tariffs on certain American products. Canada maintains that many of its retaliatory measures were introduced only after Washington launched its earlier tariff actions against Canadian goods.
The negotiations have become more complicated because Ottawa is seeking more than simply the cancellation of the latest 50 per cent tariff threat.
Canada also wants Washington to reduce existing U.S. tariffs affecting important industries such as steel, aluminum, automobiles and lumber. In exchange, the United States is seeking several Canadian concessions.
Among Washington’s demands is the return of American alcoholic beverages to provincially controlled liquor stores. Several provinces removed U.S. alcohol from their shelves as part of Canada’s response to the trade dispute, significantly reducing sales for American producers.
The United States is also pushing Canada to eliminate retaliatory tariffs on American automobiles and make changes to the country’s supply-managed dairy system.
U.S. officials have repeatedly indicated that Washington is unlikely to eliminate its broader tariff regime completely. However, there are indications that the administration may be prepared to negotiate lower rates if Canada agrees to address some American concerns.
The automobile sector remains one of the most difficult areas.
The latest U.S. proposal would reportedly reduce the headline tariff on Canadian-made vehicles from 25 per cent to 15 per cent. Vehicles containing sufficient U.S.-made components could potentially face an effective tariff of approximately 7.5 per cent.
Canadian negotiators, however, reportedly believe those rates remain too high and are seeking further reductions.
Significant differences also remain over steel and other industrial products, with Ottawa pushing Washington to lower tariff rates as much as possible. Canadian officials reportedly consider some of the concessions offered so far inadequate.
The continuing uncertainty is creating growing concern among Canadian businesses that depend heavily on access to the U.S. market.
AluQuébec CEO Charlotte Laramée said the aluminum industry has already endured approximately 18 months of uncertainty and stressed the importance of restoring more predictable trade with Canada’s largest trading partner.
Business organizations in the United States are also calling for an agreement.
The U.S. Chamber of Commerce warned Tuesday that imposing additional tariffs would damage both economies, raise costs for American families and further disrupt deeply integrated North American supply chains.
The organization also warned that escalating trade tensions could threaten millions of American jobs connected to commerce with Canada and Mexico.
While businesses are urging Ottawa to reach an agreement, the Carney government is simultaneously facing pressure from Canadian industries concerned that too many concessions could undermine their long-term interests.
Dairy is among the most politically sensitive areas.
The U.S. government and American dairy organizations want Canada to change the way tariff-rate quotas for imported dairy products are distributed. Washington is seeking greater access for Canadian grocery retailers to these quotas rather than having them largely allocated through Canadian dairy processors and distributors.
Such a change could make it easier for American milk, cheese and other dairy products to reach Canadian consumers.
Canadian dairy representatives are urging the federal government not to make further concessions, arguing that additional market access could weaken Canada’s supply-management system and hurt domestic farmers.
The final negotiations therefore present Carney’s government with a difficult balancing act. Ottawa must determine how much it is prepared to concede on alcohol, automobiles, dairy and other issues in exchange for avoiding the threatened 50 per cent tariffs and obtaining meaningful reductions in existing U.S. duties.
The outcome could have consequences far beyond the products immediately facing tariffs. Canada and the United States maintain one of the world’s largest and most integrated trading relationships, with manufacturing and supply chains frequently crossing the border several times before finished products reach consumers.
With only hours remaining, the expected discussions involving LeBlanc, Greer, Carney and Trump could determine whether the two countries move toward stabilizing their economic relationship or enter another, potentially more damaging, stage of their trade dispute.