Canada is scrambling to strike a trade deal with the U.S. before new tariffs hit

Canada is pushing hard to reach a temporary trade deal with the United States before Aug. 19. On that date, a new round of 50 per cent U.S. tariffs on a small portion of Canadian goods is set to kick in. Tariffs are taxes that one country charges on goods coming in from another, making those products more expensive. (Globe and Mail, Aug. 11; CBC News, Aug. 4)

Trade Minister Dominic LeBlanc flew to Washington on Tuesday for his third meeting with his American counterpart, U.S. Trade Representative Jamieson Greer, in three weeks. Canada's chief trade negotiator, Janice Charette, spent the weekend at the Canadian embassy in Washington preparing with trade experts ahead of the session. The two sides were expected to meet at 1:30 p.m. ET at the Winder Building, the U.S. trade office near the White House. (Globe and Mail, Aug. 11)

LeBlanc had been scheduled to travel to Washington on Monday, but his plane could not land due to a thunderstorm. He returned to Montreal, stayed overnight, and flew down Tuesday morning instead. (Globe and Mail, Aug. 11)

The two sides are working toward a temporary agreement. Canada would agree to a list of U.S. demands, and in return the U.S. would reduce some of the tariffs it has placed on Canadian goods. The U.S. wants Canada to accept limits on how much steel and aluminum it can export south, drop its own counter-tariffs on American products like cars, put American alcohol back on Canadian store shelves, open up provincial government purchasing to U.S. companies, and change how Canada handles dairy imports. In exchange, the U.S. might lower some of its tariffs on Canadian steel and aluminum, though not remove them entirely. Canada is also asking for relief on tariffs affecting cars and forestry products. (Globe and Mail, Aug. 11)

The set of tariffs Canada is trying to reduce is large. President Donald Trump placed 50 per cent tariffs on steel and aluminum, 25 per cent on autos, 10 per cent on lumber and 25 per cent on wooden furniture after returning to power in 2025. He used a law called Section 232, which lets the U.S. president impose tariffs by claiming they are needed for national security. Last month, Trump announced plans for another round of 50 per cent tariffs on about US$20-billion worth of additional goods, including alcohol, dairy products and electronics, using a different law dating back to 1930. The Aug. 19 deadline is when that latest round would take effect. (Globe and Mail, Aug. 11; Reuters, Aug. 7)

Canadian negotiators have been floating a compromise on steel and aluminum. Under this idea, Canada would agree to cap how much steel and aluminum it sends to the U.S. In return, the U.S. would lower its tariffs on those products. Anything shipped above the cap would still face the full tariff. (Globe and Mail, Aug. 4)

Prime Minister Mark Carney has said he hopes to see all of Trump's sector-by-sector tariffs resolved before Aug. 19. LeBlanc, however, has said he is not indicating whether the government expects to reach a deal before the deadline. Sources familiar with the talks told The Globe and Mail that while the outlines of a deal have been taking shape, nothing has been agreed to and Trump has not signed off on anything. (Globe and Mail, Aug. 5; Globe and Mail, July 28; Globe and Mail, Aug. 11)

The U.S. demand to open up provincial government purchasing is politically complicated. In Canada, provincial governments control their own purchasing decisions, including those of Crown corporations, which are government-owned businesses. The federal government in Ottawa can negotiate international trade commitments, but it cannot force provinces to go along. Provinces have to agree on their own. This has been a challenge in past trade talks with Europe and in the current Canada-U.S.-Mexico agreement. Whether Ottawa can get provinces on board in time is an open question.

The dairy demand is also domestically sensitive. The U.S. has long complained that Canada's system for managing dairy imports gives too much of the import access to processors — companies that turn milk into cheese and butter — rather than to retailers who sell directly to consumers. Canada's dairy system, called supply management, controls how much is produced and sets prices for farmers. Changing how import access is shared within that system has historically drawn pushback from dairy lobby groups and from politicians in Quebec and Ontario across party lines.

The broader picture is that Canada appears willing to make significant concessions — limiting its exports, opening provincial purchasing, and changing dairy rules — in exchange for only partial tariff relief. The U.S. would lower some tariffs but not remove them entirely, while Canada would move on a long list of American demands. Whether Canadians will accept that trade-off, especially with Conservative Leader Pierre Poilievre publicly urging the government not to give in to Trump's demands, will depend on how much tariff relief Washington actually offers. (Globe and Mail, Aug. 9)

With eight days left before the Aug. 19 deadline, Tuesday's meeting is the clearest chance for both sides to close the remaining gaps. Whether it produces enough for a deal before the next tariffs land, or simply sets up another round of talks, is the key question.