Canada and U.S. Race to Finalize Trade Deal Ahead of Saturday Tariff Deadline

Canadian Trade Minister Dominic LeBlanc and chief negotiator Janice Charette are set to meet U.S. Trade Representative Jamieson Greer in Washington on Thursday to finalize a trade agreement before a 12:01 a.m. EDT Saturday deadline. At that point, 50-per-cent tariffs on US$20-billion worth of Canadian goods are scheduled to take effect under Section 338 of the Smoot-Hawley Tariff Act, a U.S. law that lets the president impose steep duties on imported goods (The Globe and Mail).

LeBlanc returned to Ottawa on Wednesday after his latest session with Greer, planning to fly back to Washington the following day. Charette has been based in the U.S. capital for nearly a month during the negotiations. Foreign Affairs Minister Anita Anand is also in Washington on Thursday to meet Secretary of State Marco Rubio on continental security and other global priorities.

President Donald Trump announced Tuesday night that the two countries had reached an agreement, less than two hours before he was to impose the threatened tariffs. He then paused them until Saturday's deadline while the sides work to close a final text. The pause marked the third time in as many weeks that a tariff deadline has been moved, following earlier deadlines tied to August 19.

The trajectory of this file has shifted rapidly. As recently as Friday, LeBlanc told an advisory committee that Canada and the United States were still far from reaching a draft deal despite regular meetings. A Canadian government source had told Reuters the previous week that Washington also wanted an agreement before the August 19 deadline and that negotiations were progressing well. By Tuesday night, Trump was declaring an agreement in principle.

Prime Minister Mark Carney told provincial premiers on Wednesday that crucial details remain unresolved, including the amount of tariff relief Canada will obtain. The gap between Trump's announcement and the state of the negotiating text is the central uncertainty heading into Thursday's meeting.

Canada's primary objective is trading concessions on a long list of U.S. demands for reduced Section 232 tariffs on autos, steel, aluminum and forestry, which Trump imposed last year. Section 232 is a U.S. trade-law provision that allows tariffs on national-security grounds. Those tariffs, originally set at 25 per cent and later raised to 35 per cent by executive order in July 2025, have weighed on Canadian exporters across multiple sectors.

The U.S. demands are expansive. On the trade front, Washington wants Canada to end provincial bans on U.S. alcohol, eliminate Buy Canadian procurement policies, lift retaliatory tariffs on U.S. autos, and change how licences in the dairy supply-management system are allocated. The dairy supply-management system controls how much milk and dairy product can be produced or imported, with licences determining who can sell into the Canadian market. The defence and security demands are similarly broad: giving the United States right of first refusal on purchases of Canadian critical minerals, completing the F-35 fighter jet purchase, buying American military equipment to join the Golden Dome missile defence shield, and exporting more oil to the U.S.

The provincial dimension is where federal-provincial jurisdiction becomes directly implicated. Premiers Scott Moe of Saskatchewan and Tim Houston of Nova Scotia confirmed that Carney has asked provinces to put U.S. alcohol back on shelves as part of the deal. Several provinces pulled American booze from liquor store shelves in 2025 in retaliation for the initial U.S. tariffs. Reversing those bans requires provincial co-operation that Ottawa cannot simply direct, because liquor retail in most provinces is controlled by provincial government agencies.

Layered onto the trade negotiations is a separate U.S. tariff action: a 10-per-cent Section 301 tariff on Canadian goods related to forced labour practices, which LeBlanc addressed in a statement in late July. Section 301 is another U.S. trade-law provision, this one covering unfair trade practices. Canada has also been matching U.S. tariff exemptions for goods covered under the United States-Mexico-Canada Agreement (USMCA) by dropping corresponding retaliatory tariffs.

The broader context here is a USMCA review process that could run until 2036. The USMCA replaced NAFTA on July 1, 2020, governing trade between Canada, the U.S. and Mexico. LeBlanc has characterized the talks as a review of the existing trade pact rather than a full-scale renegotiation, though the scope of U.S. demands, particularly on security and procurement, extends well beyond what a routine review would typically cover. Carney established a new advisory committee on Canada-U.S. relations in April, noting at the time that 85 per cent of Canada's trade with the United States remains tariff-free.

What remains unresolved heading into Thursday's session is whether the concessions Canada is prepared to offer, on dairy, procurement, alcohol sales, critical minerals and defence procurement, will be sufficient to secure meaningful Section 232 tariff relief. The U.S. side has linked trade and security demands in a way that previous administrations did not, folding F-35 commitments, missile defence participation and energy exports into what was nominally a trade-pact review. For Canadian negotiators, the challenge is not only reaching agreement with Greer's office but ensuring that any deal can be delivered through the provinces, whose co-operation is required on several of the specific concessions Washington is seeking.