Negotiators from Canada are concerned that they may not be able to prevent new U.S. tariffs from being implemented on Wednesday. Ottawa is facing challenges in convincing Washington to lift existing sectoral tariffs while also seeking to persuade provinces to remove restrictions on American alcohol. Sources familiar with the negotiations, both in Canada and the U.S., have disclosed that discussions are ongoing.
The intensity of negotiations has been increasing, with Canada-U.S. Trade Minister Dominic LeBlanc meeting virtually with U.S. Trade Representative Jamieson Greer for the third time in less than a week. Ottawa’s recent focus has been on negotiating a comprehensive agreement with the U.S. The desired outcome for Ottawa is for the Trump administration to revoke the impending 50 percent tariffs on approximately $28 billion worth of Canadian goods and to reduce the existing sectoral tariffs affecting industries like steel, aluminum, auto, and lumber.
The pursuit of a comprehensive deal hinges on gaining provincial support, including a commitment to reintroduce American alcohol into the Canadian market. However, the U.S. has not shown willingness to significantly lower existing sectoral tariffs. Disagreements persist between the two countries, potentially jeopardizing the finalization of any deal if provincial opposition persists.
Provinces and territories have been informed that Canada may need to make concessions on issues raised by the Trump administration, such as provincial bans on U.S. alcohol, dairy import quotas, and retaliatory tariffs on U.S. autos, to avoid the imposition of new tariffs. Resolving these disputes is a prerequisite for any agreement.
The need for provincial cooperation is crucial for Ottawa as it lacks the authority to unilaterally lift alcohol bans imposed at the provincial level. Some provinces are reluctant to lift their bans on American alcohol until their own concerns are addressed in the trade negotiations. Only Alberta and Saskatchewan have resumed U.S. alcohol sales, while other provinces remain divided on the issue.
Dairy trade remains a contentious issue, with Quebec opposing any compromises on the supply management system that protects Canadian dairy. The U.S. has expressed dissatisfaction with the level of access for American dairy farmers in the Canadian market.
British Columbia insists that reducing tariffs on Canadian softwood lumber must be included in any trade agreement. The province views the softwood lumber industry as a critical economic sector that requires attention at the negotiation table.
Ottawa is urging a unified approach among provinces to swiftly resolve differences with the U.S. As the deadline for the new tariffs looms, there is uncertainty about the possibility of reaching a deal. Prime Minister Mark Carney had indicated that no deal might be preferable if favorable terms cannot be secured. The Canadian side has also emphasized to the U.S. the lack of public support in Canada for continuing talks if tariffs are imposed.