In a race against the clock, Canada's Prime Minister Mark Carney held urgent talks with US President Donald Trump on Tuesday, hours before fresh US tariffs on Canadian goods were set to come into force. Trump signed orders for the steep 50-percent duties last month, with the White House alleging "discriminatory treatment" by Canada against US alcohol, automobile and dairy products. The tariffs are set to take effect at midnight, covering products such as wine, hockey sticks and cement.
Efforts to avoid the tariffs are going down to the wire, with Politico reporting Tuesday that a deal to sidestep the duties awaits Trump's approval. A White House official said any deal announcement would come directly from Trump. "Until then, any discussion should be regarded as baseless speculation," the US official told AFP. Carney spoke by phone with Trump on Tuesday afternoon about the trade negotiations, the prime minister's office said. The leaders also spoke Monday, after Carney told reporters that discussions to avert the duties were at an "intense and delicate" stage.
Trump's incoming tariffs target around 5.5 percent of Canada's exports to the United States, worth about $20 billion, Oxford Economics estimates. While this only poses a "modest" negative risk to Canada's economy, Oxford Economics said in a recent report that the duties would "affect central Canada's manufacturing sector much more severely." Canadian negotiators have been in Washington to push for a deal to avoid the new tariffs and also secure relief on Trump's sector-specific duties -- which have battered Canada's auto, steel, lumber and aluminum industries.
Ottawa has reportedly offered concessions like pressuring provinces to put US alcohol and wine back on their shelves, Canadian media said. But it remains unclear if a deal is imminent. The US Trade Representative's office did not respond to queries. "It's not unusual for a trade negotiation to go right up to the deadline," former US commerce official Christopher Padilla told AFP. He expects that the Trump administration threatened new tariffs to try and win early concessions from Canada as the countries negotiate over renewing the US-Mexico-Canada free trade agreement (USMCA).
But even if officials reached a pact on the trade front, it might be rejected by Trump, who could seek to penalize Canada over other political concerns, he said. This could include issues like Canada's efforts to deepen economic ties with European countries or China. Padilla warned that Trump also has "a history of lashing out against allies when he is frustrated on other fronts," such as when he is not getting what he wants from parties like Iran, China or Russia. Oxford Economics anticipates that manufacturers who stand to be most impacted include those in the cement, paper, printing, wood, clothing and electronics equipment sectors.
With the US Supreme Court striking down many of Trump's global tariffs earlier this year, the president had tapped an untested legal provision for the new duties targeting Canada. The US duties will not apply to Canadian energy, potash or goods already facing sector-specific tariffs, but are set to hit products covered by the USMCA. Trump's trade envoy Jamieson Greer said the tariffs aimed to "hold Canada accountable" for its retaliation against the United States. Provinces have taken US alcohol products off their shelves, he said, and "given better market access to dairy products from the European Union" among other actions, Greer said in July.
