Canada and the United States are conducting intensive talks about a possible agreement that would see Ottawa take steps to resolve a list of trade grievances raised by the Trump administration in return for the U.S. abandoning a threatened round of new tariffs, a person familiar with the discussions said.
The Trump administration unveiled 50% tariffs on a broad set of imports in July, warning the measures would come into force on August 19 unless Canada addressed Washington's complaints. The source, who asked to remain anonymous because of the sensitivity of the negotiations, described a package of concessions under consideration by Canada.
Under the terms reportedly being discussed, Canada would:
- Remove tariffs on vehicles imported from the United States;
- Accept the U.S. interpretation of how dairy quota allocations should be handled;
- Seek to restore U.S. alcoholic beverages to store shelves in several major Canadian provinces.
In exchange, the source said, the United States would lower existing tariffs that it has imposed on Canadian steel and aluminum.
The source cautioned there is no certainty the two sides will reach an accord. One complication highlighted by the source is that the federal government cannot unilaterally force provincial liquor authorities to restock American alcohol on their store shelves, because provincial governments control alcohol retailing.
Officials in Ottawa have signalled to their U.S. counterparts that if no deal is negotiated to head off the new tariffs, Canada's capacity to continue bargaining could be constrained by rising public anger and the prospect of additional measures or retaliation from the provinces, the source said.
Any side agreements that might be reached to address the threatened tariffs would be incorporated into a broader review of the tripartite United States-Mexico-Canada trade pact. That review had been expected to conclude sooner but now appears likely to extend into next year.
Canada's Federal Minister responsible for U.S.-Canada trade relations, Dominic LeBlanc, declined to comment through his office. The office of U.S. Trade Representative Jamieson Greer also declined to comment.
LeBlanc has described a recent meeting with Greer as "constructive and detailed." The anonymous source said the two sides planned to meet every day leading up to the August 19 deadline.
Relations between Canada and the United States have been strained since the return of Trump to the White House last year, with the administration imposing tariffs on a range of Canadian imports and publicly advocating for strong measures toward Canada.
Summary of developments
Diplomatic engagement is underway with daily meetings scheduled through August 19 as Ottawa and Washington explore a reciprocal package of trade concessions aimed at averting the imposition of 50% tariffs on a wide array of Canadian imports. The proposed Canadian concessions focus on autos, dairy quota interpretation and the retail availability of U.S. alcohol, while expected U.S. concessions centre on reducing duties on Canadian steel and aluminum.