Prime Minister Mark Carney and U.S. President Donald Trump spoke by phone Tuesday afternoon as negotiators attempted to reach an agreement to prevent new 50% U.S. tariffs from taking effect. The call was the second between the two leaders this week, occurring hours before a midnight Wednesday deadline for the new trade measures to begin. The Prime Minister's office confirmed the conversation but did not provide details on the status of the negotiations.
The potential tariffs would apply to approximately $20 billion worth of Canadian imports to the United States. These measures would reportedly go into effect even for goods that currently qualify for preferential treatment under the U.S.-Mexico-Canada Agreement (USMCA). The talks follow a Monday meeting in Washington between Canadian Minister Dominic LeBlanc, U.S. Trade Representative Jamieson Greer, and Commerce Secretary Howard Lutnick.
Negotiations have centered on U.S. grievances regarding Canadian dairy supply management, liquor stocking policies in certain provinces, and reciprocal tariffs Canada implemented following previous U.S. actions. A significant point of contention involves the automotive sector, where officials have discussed reducing U.S. Section 232 tariffs from 25% to 15%. However, industry sources report disagreement over how to calculate North American content for tariff deductions, with Washington seeking to count only U.S.-produced parts while Canada seeks to include Mexican and Canadian components.
Individual businesses and employees will face immediate uncertainty regarding hiring and investment. Candace Laing, CEO of the Canadian Chamber of Commerce, stated that businesses have already delayed growth plans for over a year due to the trade tension. If an agreement is not reached, a Canadian government source indicated that the government may provide financial support to affected domestic industries. Furthermore, Canada could potentially suspend broader bilateral trade talks, which would affect the long-term regulatory environment for cross-border commerce.
What happens next depends on the midnight Wednesday deadline. If no deal is reached, the 50% tariffs will be applied to the targeted $20 billion in goods. Separately, the U.S. Commerce Department has set a September 30 deadline for automakers to certify American content levels under a new annual cycle that begins December 1. The Canadian government has stated that "all options remain on the table" if the tariffs take effect, including formal retaliation or domestic subsidies.