OTTAWA, Canada \u2014 A year ago, after a meeting with Canada\u2019s provincial leaders, Prime Minister Mark Carney made a pledge that he has since repeated many times.<\/p>\n
\u201cCanada will not accept a bad deal,\u201d he said about trade negotiations with President Donald Trump\u2019s administration.<\/p>\n
That promise is being put to the test as never before. Canadian trade officials have spent days camped out in Washington as they try to reach a pact to avert a punishing array of new tariffs threatened by the White House.<\/p>\n
Trump and his officials have demanded Carney act on a lengthy list of trade irritants or the U.S. will move forward on Aug. 19 with 50% duties on about $20 billion worth of Canadian products, including milk, plywood, hockey sticks and beer.<\/p>\n
The two sides are in intensive talks over a preliminary deal to stave off the new taxes, according to people familiar with the matter, speaking on condition they not be identified as the negotiations continue.<\/p>\n
The framework of a potential deal would see the U.S. back away from the 50% tariffs and reduce certain Section 232 tariffs on Canada. The 232 levies are the ones Trump has put on foreign-made steel, aluminum, autos and lumber \u2014 all industries with integrated supply chains between the U.S. and Canada.<\/p>\n
In exchange, Canada would remove some of its retaliatory measures and make other concessions, such as returning U.S. booze to store shelves and widening access to its dairy market, the people said.<\/p>\n
One item under discussion would be lowering the U.S. auto tariff, which is currently set for Canada and Mexico at 25% of the value of the non-U.S. content, the people said. Trump\u2019s previous deals with auto-exporting nations Japan and South Korea have cut the auto tariff to 15%.<\/p>\n
Roughly half of the value of a typical Canadian-made vehicle is from U.S. components. So a 15% headline rate may mean an effective 7.5% tariff, depending on the model. To get such a deal, Canada would have to roll back its retaliatory tariffs on U.S.-manufactured cars and trucks.<\/p>\n
The U.S. and Canada are also discussing changing steel tariffs to exclude certain derivative products and potentially also lower the headline tariff rate, the people said.<\/p>\n
Canada has accepted that it can\u2019t get all U.S. tariffs removed. But it wants the Section 232 tariffs set at 10% or lower, and the U.S. is resisting that, one of the people said.<\/p>\n
The situation remains fluid, and may produce an initial deal that wouldn\u2019t settle all trade irritants but would open the door to further discussion, the people said. But any pact would need Trump\u2019s blessing. The president had not yet been briefed on the talks as of Tuesday, a White House official said. U.S. Trade Representative Jamieson Greer is leading U.S. efforts, with the involvement of others including Commerce Secretary Howard Lutnick.<\/p>\n
A U.S. official, speaking on condition of anonymity, said the Trump administration is willing to discuss trade but is committed to the president\u2019s policy of using tariffs and other measures to reshore manufacturing and reduce the trade deficit. The official declined to detail the ongoing talks.<\/p>\n
\u2018What\u2019s the Alternative?\u2019<\/p>\n
It\u2019s far from clear whether Trump is willing to give significant ground on the Section 232 levies \u2014 or whether, in the longer run, his administration will even consider renewing the U.S.-Mexico-Canada Agreement. That puts Carney in a bind: How far can he go in granting concessions if U.S. tariffs are staying in place permanently?<\/p>\n
\u201cThis is going to come down to the U.S. tariffs on steel, aluminum, and automobiles,\u201d said Brian Clow, who played a major role for Canada in U.S. trade negotiations under Carney\u2019s predecessor, Justin Trudeau.<\/p>\n
\u201cThe 232s have to get close to zero, especially for automobile trade where the margins are so low,\u201d he said. \u201cIf the U.S. isn\u2019t willing to significantly lower the 232 tariffs, the provinces won\u2019t put alcohol back on shelves. If alcohol isn\u2019t back on shelves, the U.S. won\u2019t finalize a deal.\u201d<\/p>\n
Carney, 61, and his team have optimistically seen next week\u2019s deadline as an opportunity to finally get the comprehensive tariff-reduction deal with Trump they\u2019ve been seeking for more than a year. But the prime minister has limited room to maneuver.<\/p>\n
The liquor bans, imposed by provincial governments after Trump\u2019s initial round of tariffs in early 2025, have done major harm to U.S. exporters of wine, whiskey and other products. Canadian imports of American alcoholic beverages plunged 81% in a year, according to the White House.<\/p>\n
Carney can try to persuade provincial leaders on booze, but he can\u2019t order them to. And each province has its own grievances with the U.S.<\/p>\n
For Ontario, Canada\u2019s manufacturing heartland, a deal would have to include tariff relief on steel and autos to win over Premier Doug Ford.<\/p>\n
\u201cWe want a fair deal for Ontario. We want a fair deal for Canadians. And we negotiate through strength, not weakness,\u201d Ford told reporters Thursday. Asked if a lowered levy on autos would be considered a fair deal, Ford replied that \u201cevery single tariff, we have to match tariff for tariff.\u201d<\/p>\n
In British Columbia, with its massive forestry industry, Premier David Eby\u2019s priority is getting duties lowered on softwood lumber \u2014 though it appears lumber won\u2019t be part of an initial deal, some of the people said.<\/p>\n
Eby\u2019s office declined to comment. Recently, he said \u201cthere is not a chance in hell\u201d U.S. alcohol will go back on shelves in BC. \u201cThe idea of the president, that he can bully us into whatever he wishes, is incorrect.\u201d<\/p>\n
And in Quebec, Premier Christine Fr\u00e9chette will be looking for reduced tariffs on aluminum without giving away major concessions on dairy. A spokesperson for Fr\u00e9chette said: \u201cIn the context of the ongoing trade war, the Premier continues to defend Quebec\u2019s economic interests.\u201d<\/p>\n
In other words, resolving the booze bans will necessitate a pact that\u2019s palatable to policymakers across Canada of different political stripes. That\u2019s yet another complication for Carney.<\/p>\n
\u201cIt underscores the difficulty of governing our country as a federation,\u201d said Goldy Hyder, chief executive officer of the Business Council of Canada, which has been pushing Carney to get to a deal with Trump. \u201cI think the prime minister has to carve out a place for doing what\u2019s right for the country above all else.\u201d<\/p>\n
A spokesperson for Dominic LeBlanc, Canada\u2019s minister in charge of U.S. trade, declined to comment.<\/p>\n
Many business executives don\u2019t want Carney to grant concessions too easily. A KPMG survey of hundreds of business leaders found about 70% said the Canadian government should take a tough stance in negotiations, using any leverage it has available with the country\u2019s most important trading relationship on the line.<\/p>\n
\u201cIf we are not tough, what\u2019s the alternative? We\u2019re going to concede and give everything that they\u2019ve asked for without getting anything in return?\u201d asked Joy Nott, a partner in KPMG\u2019s trade and customs practice in Canada. \u201cThat would be seen as more negative.\u201d<\/p>\n
In recent days, Canadian officials have warned Greer that they can\u2019t accept a deal that forces concessions without getting any movement on Section 232 tariffs, according to people briefed on the negotiations. Such a move would be impossible given the Canadian public mood, they said.<\/p>\n
Polls show that, too. A recent Abacus Data poll found 69% of residents in Ontario and 72% in British Columbia want to keep the U.S. alcohol restrictions in place.<\/p>\n
Another recent survey from the Angus Reid Institute found that 62% of Canadians want Carney to hit the U.S. with retaliatory tariffs if Trump carries out his latest tariff threat. Only 19% want to take that option off the table and 7% want to offer up concessions.<\/p>\n
If Trump goes ahead with it, Carney \u201cwill have to do something,\u201d said Eric Miller, founder of Rideau Potomac Strategy Group, a trade and economic consultancy. \u201cThe public is just angry. The public is kind of done.\u201d<\/p>\n
\u2014With assistance from Derek Decloet, Thomas Seal and Melissa Shin.<\/p>\n","protected":false},"excerpt":{"rendered":"OTTAWA, Canada \u2014 A year ago, after a meeting with Canada\u2019s provincial leaders, Prime Minister Mark Carney made…\n","protected":false},"author":2,"featured_media":167156,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[98],"tags":[364,366,239,17,21892,8118,19513,6132,384,53694,111,388,4408,94,61,6777,241,3191,400,51512,401,30,3211],"class_list":["post-167155","post","type-post","status-publish","format-standard","has-post-thumbnail","category-mark-carney","tag-americas","tag-asia","tag-british-columbia","tag-canada","tag-central-america","tag-district-of-columbia","tag-eastern-asia","tag-international-relations","tag-japan","tag-lumber-milling","tag-mark-carney","tag-mexico","tag-north-america","tag-ontario","tag-ottawa","tag-politics-and-government","tag-quebec","tag-south-korea","tag-tariffs","tag-taxation-and-taxes","tag-trade","tag-united-states","tag-washington"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/167155","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=167155"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/167155\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/167156"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=167155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=167155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=167155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}