Canada and the U.S. Are Racing to Stop New Tariffs — Here's What's Going On
Prime Minister Mark Carney spoke with U.S. President Donald Trump by phone late Monday as Canada pushed to stop new American tariffs set to kick in Wednesday at 12:01 a.m. (The Globe and Mail)
The call was confirmed by Jane Deeks, the Prime Minister's director of communications. It came after Carney told reporters on August 17 that he expected to speak with Trump before the deadline, saying he would have "opportunities over the next 48 hours" to do so (CBC).
The new tariffs would place a 50-per-cent tax on roughly US$20 billion worth of Canadian goods entering the United States. A tariff is a tax a government charges on imported products, which makes those products more expensive for buyers. The affected goods include electronics, dairy, alcohol, wood and other items. British Columbia, Ontario and Quebec would be hit hardest, because all three provinces have kept bans on U.S. alcohol products in response to earlier American tariffs (The Globe and Mail).
Trade Minister Dominic LeBlanc stayed in Washington with Janice Charette, the Prime Minister's top negotiator, working through the final hours. LeBlanc met with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick as part of the talks (The Globe and Mail).
Canada was trying to reach a deal on two fronts. The first was stopping the new 50-per-cent tariffs outright. The second was addressing older U.S. tariffs on autos, metals and forestry products, which the U.S. imposed under a law that lets it tax imports it considers a national-security concern. The idea on the table: Canada would accept lower tariff levels on those older duties, and in exchange, Canadian provinces would lift their U.S. alcohol bans and Ottawa would drop its own retaliatory tariffs on autos (The Globe and Mail).
The exact tariff rates for autos and lumber remained unresolved, with the U.S. refusing to budge on autos (The Globe and Mail).
The Monday call between Carney and Trump is part of a longer history of trade tension. Carney spoke with Trump on March 28, 2025, telling him Canada would impose retaliatory tariffs to protect Canadian workers and the economy (PMO readout). At a meeting with provincial and territorial leaders on June 20, 2025, Carney highlighted federal measures announced the day before to protect workers and businesses from what the government called unjust tariffs (PMO readout).
In a January 20, 2026 speech titled "Principled and pragmatic: Canada's path," Carney said Canada strongly opposes tariffs over Greenland and called for focused talks to achieve shared goals of security and prosperity (PMO speech).
What makes this dispute unusual is that two levels of government in Canada — federal and provincial — each have their own tools to use. The federal government has placed its own tariffs on American goods. Provincial governments in B.C., Ontario and Quebec have blocked American alcohol from their store shelves. Those provincial bans give Canada more to bargain with, but they also make any deal harder, because the three premiers have said the bans are non-negotiable.
The auto tariff rate matters most for Ontario, where car parts and vehicles cross the border back and forth during production. Even a small tariff increase raises costs directly for automakers and parts suppliers on both sides of the border. The U.S. refusing to move on autos suggests Washington knows both sides would feel the pain if Canada retaliated in that sector.
Time is the key factor. With the new tariffs set to take effect at 12:01 a.m. Wednesday, the window for a deal is down to hours. Whether the Carney-Trump call moved things forward on auto and lumber rates, or simply set out each side's position before the deadline, has not been made public. LeBlanc and Charette remain in Washington.
