Prime Minister Mark Carney says Canada is prepared to take a harder line with the United States if no trade agreement is reached before President Donald Trump's latest round of tariffs takes effect Aug. 19.

"We are going to do everything that would be necessary if there isn't a deal on Aug. 19," Carney said Wednesday at an announcement in Toronto (The Globe and Mail). "The time to get tougher will be if there is a moment where there isn't a deal with the Americans."

He did not specify what retaliatory measures he is weighing, saying only that Canada "has options." Carney has previously ruled out using energy as leverage in the U.S. trade talks.

The Aug. 19 deadline refers to Trump's announcement last month of a new round of tariffs under Section 338 of the Smoot-Hawley Tariff Act of 1930, targeting US$20-billion in Canadian exports including alcohol, dairy and electronics. That came alongside a separate set of 50-per-cent tariffs on Canadian steel and aluminum imposed under Section 232 of the Trade Expansion Act of 1962. After the Section 338 announcement, Carney said "everything is on the table" as he considered how and whether to retaliate (Reuters).

Carney said Canada's objective is to secure a comprehensive deal covering all of Trump's sectoral tariffs. "We want all 232s addressed, all strategic sectors. Steel, aluminum, autos, forest products," he said. He described autos as "very much at the core of what we're talking about" in the trade talks.

Negotiators have revived a proposal under which Canada would accept export quotas on steel and aluminum in exchange for the removal of the 50-per-cent Section 232 tariffs on those metals, according to The Globe and Mail.

Intergovernmental Affairs Minister Dominic LeBlanc and chief negotiator Janice Charette are in Washington for the second time in as many weeks to drive negotiations forward. On Tuesday they met with Jay Timmons, CEO of the National Association of Manufacturers, and on Wednesday with Republican Senators Kevin Cramer of North Dakota and Bill Hagerty of Tennessee. Carney said he has had direct conversations with the Americans and described them as "real negotiations, constructive negotiations on several issues."

Carney also said Canadian tariffs on items outside the CUSMA framework would remain in place, and that the government would focus on industries the U.S. has targeted (Reuters). Separately, effective Dec. 26, 2025, Canada applied a 25-per-cent tariff on the full value of listed steel derivative products from all countries (Prime Minister's Office).

The talks operate against an unusually complex tariff architecture. Section 232 of the Trade Expansion Act of 1962 allows the U.S. president to impose tariffs on national security grounds, the mechanism behind the 50-per-cent duties on Canadian steel and aluminum. Section 338 of the Smoot-Hawley Tariff Act of 1930, the basis for the Aug. 19 round targeting alcohol, dairy and electronics, is a rarely invoked provision with roots in Depression-era trade legislation. The simultaneous use of both statutes gives the U.S. administration leverage across multiple sectors at once, and gives Canada the corresponding challenge of seeking a single deal that dismantles tariffs imposed under two distinct legal authorities.

The broader context here is that Carney is managing a dual-track file: pressing for the removal of existing Section 232 tariffs while trying to preempt the Aug. 19 Section 338 round before it takes effect. His refusal to detail retaliatory options, combined with the explicit exclusion of energy from the toolkit, narrows the range of plausible countermeasures to tariff escalation on non-CUSMA goods and trade-remedy actions such as the steel-derivative duties already in place. The revived quota-for-tariff proposal on steel and aluminum suggests the two sides are exploring a managed-trade framework rather than a full return to pre-tariff conditions, which would mark a structural shift in how cross-border metals trade is governed under CUSMA.

The engagement with Senate Republicans and a major U.S. manufacturing lobby indicates Canada's strategy includes building congressional and industry pressure on the administration, a playbook familiar from the original CUSMA negotiations and the 2018 Section 232 dispute. The difference now is the compressed timeline: just under two weeks before the Aug. 19 deadline, with no public indication that the core disagreements on autos and the Section 338 list have been bridged.