Carney and Trump Talk as Wednesday Tariff Deadline Looms

Prime Minister Mark Carney spoke with U.S. President Donald Trump by phone late Monday as Ottawa pushed to stop sweeping new American tariffs set to take effect Wednesday at 12:01 a.m. (The Globe and Mail)

The call, confirmed by the Prime Minister's director of communications Jane Deeks, 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, authorized under Section 338 of the Smoot-Hawley Tariff Act — a decades-old American trade law — would impose 50-per-cent duties on roughly US$20 billion worth of Canadian goods. The affected products span electronics, dairy, alcohol, wood and other categories. British Columbia, Ontario and Quebec would be most affected, as all three provinces have kept bans on U.S. alcohol products in retaliation for earlier American tariffs (The Globe and Mail).

Canada-U.S. Trade Minister Dominic LeBlanc stayed in Washington alongside Janice Charette, the Prime Minister's top negotiator, working through the final hours before the deadline. LeBlanc met with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick as part of the talks (The Globe and Mail).

Canadian negotiators were pursuing an agreement on two fronts: stopping the Section 338 tariffs outright and addressing the longer-standing Section 232 duties on autos, metals and forestry imposed under the Trade Expansion Act. Section 232 tariffs are rooted in American national-security law, meaning the U.S. applies them by designating certain imports as a threat to domestic security. The framework under consideration involved Canada accepting lower tariff levels on Section 232 sectors in exchange for concessions from the American side, including provincial governments lifting their U.S. alcohol bans and Ottawa dropping its counter-tariffs on autos (The Globe and Mail).

The specific tariff rates that would apply to autos and lumber remained sticking points, with the U.S. holding firm on its position on autos (The Globe and Mail).

The Monday call between Carney and Trump fits into a longer arc of bilateral tension stretching back to the early weeks of Carney's premiership. Carney spoke with Trump on March 28, 2025, informing him that Canada would implement retaliatory tariffs to protect Canadian workers and the economy (PMO readout). At a First Ministers' Meeting on June 20, 2025, Carney underscored federal measures announced the previous day to safeguard workers and businesses from what the government characterized as 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 objectives of security and prosperity (PMO speech).

The broader context here is the layered reality of Canada-U.S. trade, where two levels of government — federal and provincial — each hold separate levers in the dispute. The Section 232 tariffs cover sectors concentrated in central Canada, particularly Ontario's auto assembly chain. The Section 338 measures, by contrast, reach into consumer goods and agricultural products that flow from multiple provinces, and their impact is sharpened by the provincial alcohol bans that B.C., Ontario and Quebec have kept in place as retaliatory tools of their own.

That interplay between federal counter-tariffs and provincial restrictions has given Ottawa a broader set of bargaining chips, but also tighter constraints. Any deal requiring provinces to lift their booze bans would need provincial buy-in, and the premiers of the three most affected provinces have positioned those bans as non-negotiable signals of resolve. The Section 232 auto rate is the more economically consequential figure for Ontario, where integrated cross-border supply chains mean that even moderate tariff increases carry direct cost implications for automakers and parts manufacturers. The U.S. holding firm on autos suggests the American side sees leverage in the integrated nature of the sector, where Canadian retaliation on autos could also impose costs on U.S. manufacturers.

The clock remains the central variable. With the Section 338 levies set to take effect at 12:01 a.m. Wednesday, the window for a negotiated outcome narrows to hours. Whether the Carney-Trump call produced movement on the auto and lumber rates, or simply established positions ahead of the deadline, has not been disclosed. LeBlanc and Charette remain in Washington.