Negotiators from Canada are concerned about the impending implementation of new U.S. tariffs set to take effect on Wednesday. Attempts to secure relief from existing sectoral tariffs and convince provinces to lift restrictions on American alcohol are proving challenging for Ottawa, according to sources briefed on the negotiations.
The intensity of the negotiations has been increasing, with Canada-U.S. Trade Minister Dominic LeBlanc engaging in discussions with U.S. Trade Representative Jamieson Greer, with their latest virtual meeting lasting about an hour on Sunday. The main objective for Ottawa has been to strike a “comprehensive agreement” with Washington, aiming to persuade the Trump administration to eliminate the new 50 percent tariffs on nearly $28 billion worth of Canadian goods scheduled to be imposed.
Central to this agreement is the reduction of existing sectoral tariffs affecting industries such as steel, aluminum, auto, and lumber. Currently, steel and aluminum face 50 percent tariffs, while autos are subject to 25 percent tariffs.
Sources reveal that a comprehensive deal encompassing relief on sectoral tariffs is crucial to garner provincial support, particularly in reinstating American alcohol sales in Canada. However, disagreements persist between the two countries, with provinces reluctant to lift their alcohol bans without reciprocal tariff relief from the U.S.
Provinces have been informed that Canada may need to make concessions on issues raised by the Trump administration, including provincial alcohol bans, dairy import quotas, and retaliatory tariffs on U.S. autos, as prerequisites for averting the impending tariffs.
The negotiation dynamics are further complicated by provinces’ demands for resolution of their grievances within the trade deal framework. Notably, British Columbia insists on the inclusion of softwood lumber tariff reductions in any agreement, emphasizing the significance of the sector to the Canadian economy.
Ottawa is emphasizing the importance of a unified approach among provinces to swiftly address the trade impasse with the U.S., as the deadline for the tariffs looms. Despite the challenges, efforts to reach a consensus continue amidst the high stakes for various Canadian provinces dependent on trade relations with the U.S.