Canada seeks to avert new US tariffs as deadline looms

Canada is engaged in high-stakes negotiations to avert new U.S. tariffs scheduled to take effect Wednesday, which would impact roughly $20 billion worth of Canadian goods. The planned duties, amounting to 50%, were announced last month by President Donald Trump, who cited alleged discriminatory treatment of American alcohol, automobile, and dairy products by Canada. The tariffs are set to cover a range of products including wine, hockey sticks, and cement, representing approximately 5.5% of Canada's total exports to the U.S. While Oxford Economics estimates this poses a "modest" negative risk to the Canadian economy overall, it warns of more severe impacts on the manufacturing sector in central Canada. Negotiations are proceeding down to the wire, with Canadian Prime Minister Mark Carney speaking with President Trump on Monday. Carney described the talks as being at an "intense and delicate" stage. Canadian negotiators are in Washington pushing for a deal to avoid the new tariffs and also seek relief from existing U.S. duties that have significantly affected Canada's auto, steel, lumber, and aluminum industries. Reports suggest Ottawa has offered concessions, such as pressuring provinces to reinstate U.S. alcohol and wine on their store shelves. However, the likelihood of an imminent deal remains uncertain, as the U.S. Trade Representative's office has not responded to queries. Experts note that trade negotiations often extend to the deadline. Christopher Padilla, a former U.S. commerce official, suggested that the Trump administration may be using the threat of new tariffs to gain early concessions from Canada as both countries renegotiate the USMCA free trade agreement. Padilla also cautioned that Trump has a history of retaliating against allies when frustrated on other fronts, potentially penalizing Canada over unrelated political issues. Manufacturers in sectors such as cement, paper, printing, wood, clothing, and electronics equipment are anticipated to be the most affected. The U.S. is utilizing a less-tested legal provision for these new duties targeting Canada, following the U.S. Supreme Court's invalidation of some of Trump's earlier global tariffs. These duties will not apply to energy, potash, or goods already subject to sector-specific tariffs but will affect products covered by the USMCA.

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It’s not unusual for a trade negotiation to go right up to the deadline.