Canada and the United States are not close to finalising a trade pact that would blunt a wave of new American tariffs slated to take effect next week, a source with direct knowledge of the talks told Global News.
Tariff stalemate
Negotiators spent a week in Washington reviewing tariffs line by line, a process described by multiple insiders as "constructive" but still leaving a sizeable distance between the parties. The source said any agreement the Trump administration is prepared to sign will retain some level of duties on steel, aluminium, automobiles and lumber.
Canada, by contrast, will not accept a deal that does not deliver a substantial cut to U.S. tariffs. Under the Canada‑U.S‑Mexico Agreement (CUSMA), duties on Canadian autos and parts would remain but are expected to fall below the current 25 percent rate, according to a source familiar with the negotiations.
Auto‑industry representatives warned that even a reduced tariff would threaten the sector. "We shouldn't be offering any concessions to the United States right now. The reality is the U.S. has imposed tariffs on Canada," said Lana Payne, national president of Unifor, at a news conference in Brampton, Ont.
The United States is also pressing for changes to quota allocations that would allow more U.S. dairy to enter Canada tariff‑free and for American alcohol to be reinstated on provincial shelves. The Dairy Farmers of Canada issued a statement insisting that "no more concessions on dairy or supply management are made in talks with the United States."
U.S. Trade Representative Jamieson Greer reiterated that the 50 percent tariffs on certain Canadian goods are a direct response to Canada's retaliatory measures. Speaking at the Iowa State Fair, Greer likened the measures to "the kind of things that China would do," and said they must be resolved.
Implications for Canadian industry
Beyond autos, the unresolved steel and aluminium duties could affect defence procurement, where Canadian forces rely on North‑American metal suppliers for shipbuilding and aircraft projects. A prolonged tariff regime would raise costs for the Canadian Armed Forces and could complicate joint‑industry initiatives with U.S. partners.
The current Canadian government, led by Prime Minister Justin Trudeau, has indicated a willingness to walk away from any agreement that fails to protect key sectors. Nevertheless, officials prefer to avoid the August 19 deadline that would trigger the new tariffs, according to multiple sources briefed on the government's three‑step strategy.
The first step aims to secure a sector‑specific tariff deal and stave off new duties. The second envisions broader partnerships in energy and defence, while the third would reopen negotiations on CUSMA in a more stable environment. The United States declined to renew the free‑trade pact at its scheduled review last month, despite Canada and Mexico urging a new 16‑year term.
With the deadline approaching, Canadian manufacturers and exporters face uncertainty that could ripple through supply chains, investment decisions and the broader North‑American economic relationship.
Based on reporting by Global News.