There are concerns among Canadian negotiators regarding the potential imposition of new U.S. tariffs on Wednesday. Ottawa is facing challenges in obtaining relief from Washington on existing sectoral tariffs while also working to persuade provinces to remove restrictions on American alcohol, according to sources familiar with the matter.
Multiple sources from Canada and the U.S. have received direct briefings on the ongoing negotiations and have been granted confidentiality to discuss the talks candidly.
The negotiations are escalating, with Canada-U.S. Trade Minister Dominic LeBlanc meeting virtually with U.S. Trade Representative Jamieson Greer for the third time in less than a week, on Sunday afternoon. The meeting, lasting about an hour, is part of Ottawa’s recent efforts to secure a “comprehensive agreement” with Washington.
Ottawa aims for the Trump administration to drop the impending 50% tariffs on nearly $28 billion worth of Canadian goods and to reduce existing sectoral tariffs affecting industries like steel, aluminum, auto, and lumber. Currently, steel and aluminum face 50% tariffs, while auto tariffs stand at 25%.
During a speech in Des Moines, Iowa, United States Trade Representative Jamieson Greer highlighted the trade issues with Canada, stating that any perceived retaliation will not be tolerated.
Sources indicate that securing a comprehensive deal, addressing both tariffs and alcohol bans, is crucial to gaining provincial support. The resumption of U.S. alcohol sales in Canada is a key demand from the Trump administration in the negotiations.
However, significant gaps remain between the two countries, especially concerning the reduction of existing sectoral tariffs. Some provinces are hesitant to lift alcohol bans unless reciprocal tariff relief is offered by the U.S., complicating the negotiation process.
Canada’s Readiness to Compromise
Sources reveal that Canada may need to compromise on issues raised by the Trump administration, including provincial bans on U.S. alcohol, dairy import quotas, and retaliatory tariffs on U.S. autos, to avoid the looming tariffs.
Greer emphasized that resolving these disputes is a prerequisite for any agreement to avert the upcoming tariffs.