Prime Minister Mark Carney and U.S. President Donald Trump spoke by phone on Tuesday, one day after Trump announced new tariffs (import taxes) on Canadian goods set to start August 19. The Globe and Mail

Carney told reporters about the call. "I've spoken with the president, we agreed to intensify discussions, we'll begin that right away," he said. The Globe and Mail

The new tariffs target Canadian alcohol, dairy products and a range of other goods. They will not include an exemption for goods trading under the U.S.-Mexico-Canada Agreement (CUSMA) — the trade deal among Canada, the U.S. and Mexico that replaced NAFTA and is supposed to keep qualifying goods tariff-free across borders. The Globe and Mail

Trump used a legal tool called Section 338 of the Tariff Act, a Depression-era law that had never been used before. The Globe and Mail reported the tariff rate at 50 per cent. The Globe and Mail

The tariff announcement follows a July 20 in-person meeting between Trump and Carney described as a "sitting," after which Trump threatened tariffs over wildfire smoke drifting into the U.S. from Canadian forest fires. CTV News

When asked whether the Monday tariffs were the same as his wildfire threat, Trump said more tariffs could still come. "That's separate. We're looking at that separately," he said. The Globe and Mail

Carney stated Canada would consider retaliatory tariffs — meaning Canada would put its own taxes on American goods in response — only if the tariffs threatened by Trump are actually imposed. The Globe and Mail

Dominic LeBlanc serves as Minister for Canada-U.S. Trade in the Carney government. The Globe and Mail

Carney said he would speak with premiers (the leaders of Canada's provinces and territories) meeting in Charlottetown, P.E.I., and would join them there for events and meetings on Wednesday and Thursday. The Globe and Mail

The broader context here involves two separate but related U.S. trade actions. The Monday tariffs are a real measure with a set start date of August 19. They hit specific products, like dairy and alcohol, and they skip the CUSMA trade deal that normally keeps qualifying goods free of tariffs between Canada, the U.S. and Mexico. The wildfire smoke tariffs, on the other hand, are still just a threat that Trump has kept separate from the current levies.

For the Carney government, the immediate challenge is handling several things at once. By waiting to see if the tariffs are actually imposed before deciding on retaliation, Canada keeps its options open and buys time for the talks Carney mentioned. Having LeBlanc as a minister focused specifically on Canada-U.S. trade means the file is being handled through a dedicated channel rather than general foreign affairs.

The federal-provincial side is also moving. The premiers are already gathered in Charlottetown, and Carney's plan to join them Wednesday and Thursday means the tariff response will be co-ordinated with the provinces, not decided by Ottawa alone. Different provinces will feel the tariffs differently. Dairy and alcohol producers in Quebec, Ontario and the Prairies would be hit hardest. A 50 per cent tariff, if it takes effect, would make it much harder for those producers to sell into the U.S. market.

The use of Section 338 of the Tariff Act raises a legal question. Because the provision has never been used before, nobody knows for sure how far its powers go or how courts might interpret it. That makes the upcoming talks unusual: Canada and the U.S. are not just negotiating around a familiar trade tool but dealing with a legal mechanism whose limits have never been tested. The lack of a CUSMA exemption adds another complication, since it removes the tariff-free pathway that the agreement was built to provide.