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Negotiators from Ottawa and Washington are scrambling to seal a trade agreement before a midnight deadline that would see new U.S. tariffs on US$20 billion of Canadian goods take effect. President Donald Trump told reporters at Joint Base Andrews that he expects a deal with Canada, adding that talks with Mexico are also progressing toward what he described as a “much better” arrangement for the United States.
Canada’s trade team, led by Minister Dominic LeBlanc and chief negotiator Janice Charette, met with U.S. Trade Representative Jamieson Greer in Washington on Friday. The first session lasted an hour, followed by a second meeting that began at 3:45 p.m. and stretched into a three‑and‑a‑half‑hour discussion. After emerging from Greer’s office, LeBlanc told reporters that “we have more work to do,” while Charette remained behind to continue the negotiations.
Negotiations Race Against Clock
The urgency stems from a Tuesday decision by Trump to postpone the imposition of new tariffs for three days, giving officials a narrow window to finalize an agreement. If no deal is reached by midnight, the tariffs will apply to a broad range of Canadian exports, including steel, aluminum, automobiles and forest products. Both sides have indicated a willingness to lower certain sectoral duties, but they remain far apart on the exact levels that will be acceptable.
Steel Quota Proposal Details
According to three sources familiar with the talks, the emerging steel arrangement would adopt a tariff‑rate‑quota (TRQ) model. Under the proposal, Canada could ship up to four million tonnes of steel to the United States each year at a 25 % tariff. Any steel exceeding that quota would face a 50 % duty – the same rate currently imposed under Trump’s Section 232 measures. Industry insiders say the deal would also require Canada to lift its counter‑tariffs on U.S. steel and to tighten restrictions on steel imports from third countries.
Earlier discussions had floated a more favourable TRQ with an in‑quota tariff of only 10‑15 %, making the current offer a step back from what Ottawa had hoped for.
Auto and Aluminum Talks
Beyond steel, the negotiations cover aluminum and automobiles. Washington is said to be prepared to cut tariffs on Canadian cars from 25 % to 15 %, contingent on a U.S.‑content carve‑out. Analysts warn that without a reciprocal Canadian‑content exemption, the effective tariff on Canadian vehicles would hover around 7.5 %, a level many experts deem insufficient to preserve the sector’s long‑term viability. Including a Canadian‑content carve‑out could push the effective rate nearer to 5 %.
Aluminum discussions are proceeding in parallel, with both sides seeking a reduction in duties, though specific figures have not been disclosed.
Domestic Political Pushback
The potential agreement has sparked unease among some provincial leaders. Manitoba Premier Wab Kinew expressed reluctance to endorse a deal that would see U.S. alcohol return to provincial shelves, hoping Canadians would choose not to purchase it. He warned that accepting the current terms could erode Canada’s leverage ahead of a future overhaul of the USMCA.
Ontario Premier Doug Ford and British Columbia Premier David Eby have yet to state their positions, while Quebec Premier Christine Fréchette said she is still deliberating. Federal Conservative Leader Pierre Poilievre echoed the criticism, urging Prime Minister Mark Carney to honour his election‑campaign pledge to negotiate an “elbows‑up” deal and not accept a one‑sided arrangement that would disadvantage Canadian businesses.
Why it Matters
The outcome of these talks will shape the immediate cost structure for key Canadian export industries and set a tone for the broader renegotiation of the North American trade framework. A steel TRQ that maintains a 25 % in‑quota tariff offers limited relief compared with earlier aspirations, while the auto sector’s fate hinges on whether Canada secures a meaningful content exemption. Simultaneously, provincial resistance to concessions on alcohol and other measures could complicate the ratification process, exposing fissures within Canada’s domestic political landscape. If the midnight deadline passes without an agreement, the re‑imposition of sweeping tariffs would disrupt supply chains, raise costs for manufacturers, and test the resilience of Canada’s export‑driven economy. Conversely, a successful deal—even with its compromises—could avert an immediate shock and provide a platform for future negotiations that address deeper concerns such as market access, investment rules, and dispute resolution. The coming hours will determine whether Canadian industry faces a temporary reprieve or a prolonged period of uncertainty.
