Negotiators from Canada are concerned that they may not be able to stop new U.S. tariffs from being implemented on Wednesday. Ottawa is facing challenges in persuading Washington to lift existing sectoral tariffs and in convincing provinces to remove restrictions on American alcohol, according to sources familiar with the matter. The negotiations, involving Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer, have been ongoing intensively, with the latest virtual meeting held on Sunday.
Canada aims to secure a “comprehensive agreement” with the U.S., including the cancellation of new 50 per cent tariffs on around $28 billion worth of Canadian goods. Additionally, Ottawa seeks a reduction in existing sectoral tariffs that have been impacting industries such as steel, aluminum, auto, and lumber. Provinces are crucial to any deal, especially in terms of reinstating American alcohol sales, a key demand from the Trump administration.
However, disagreements persist between the two countries, particularly regarding the reduction of existing tariffs and the lifting of alcohol bans by provinces. Some provinces are linking lifting their alcohol bans to relief on tariffs affecting their industries, leading to a deadlock in negotiations. Provinces have been informed that Canada may need to make concessions on issues such as provincial alcohol bans, dairy import quotas, and retaliatory tariffs on U.S. autos to reach a deal and avert the impending tariffs.
The involvement of provinces is crucial for resolving the alcohol ban issue, as only Alberta and Saskatchewan have resumed U.S. alcohol sales. Other provinces are divided on this matter, with some demanding fair deals that protect key sectors before agreeing to lift the bans. The Quebec Premier emphasizes the importance of maintaining the supply management system for dairy, a contentious issue in trade talks with the U.S.
British Columbia is advocating for the inclusion of softwood lumber tariff reductions in the trade deal, highlighting the significance of this issue for its economy. However, the current U.S. proposal does not address this concern, causing further complications in the negotiations. The urgency of reaching a consensus is evident, as the U.S. appears unwilling to extend the tariff deadline.
Efforts are being made to foster a unified approach among Canadian provinces and territories in negotiations with the U.S. to address the trade challenges effectively. The possibility of talks ending without a deal has been considered, with a focus on finding solutions to avoid the imposition of new tariffs.