President Donald Trump’s 50% tariffs on a broad range of Canadian goods are set to take effect Wednesday, but the U.S. and Canada are working to reach a deal to avoid them.
The details aren’t worked out yet, and The Washington Post reports that recent talks have been contentious. The Post reports that a deal could pair Canadian tariff concessions with commitments on energy, defense and critical minerals in exchange for the U.S. dropping some of the new tariffs and easing ones on steel and aluminum.
A deal could also feed into the broader renegotiation of the U.S.-Mexico-Canada Agreement, or USMCA, which has been complicated by Trump’s separate tariffs on the two countries.
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Why the 50% tariffs?
Fear No Fact.
The new 50% on Canadian tariffs cover nearly $20 billion worth of Canadian imports.
Trump signed an order last month imposing new 50% tariffs on a broad range of Canadian goods under a Great Depression-era trade law, after the Supreme Court limited his use of a separate tariff authority earlier this year. The order came just days after the president threatened higher tariffs over Canadian wildfire smoke affecting parts of the northern and Midwestern U.S. — but the Trump administration insists the 50% tariffs are separate from that threat.
Section 338 of the Tariff Act of 1930 allows a president to impose tariffs of up to 50% on imports from countries found to discriminate against U.S. commerce.
A senior administration official said the new tariff order was based on Canada’s treatment of U.S. auto, dairy and alcohol exports. Most Canadian provinces took U.S. wines and spirits off the shelves of government-run stores after Trump imposed his Liberation Day tariffs. Canada also imposed a 25% tariff on some U.S. autos.
What we know about the negotiations
Sources told CBC News the U.S. has said it’s open to cutting auto tariffs in half to 12.5%, but Canadian negotiators reportedly say that’s not good enough.
CBC is also reporting that Canada will need to concede on dairy in any new deal. The White House claims that Canada’s tariffs on cheese from the U.S. are “much more restrictive” than those on similar imports from Europe.
The Canadian government has reportedly told provinces to be ready to put U.S. alcohol back on store shelves as soon as possible in case a deal is reached. CBC reports that Canadian negotiators see the restrictions on U.S. alcohol sales as a significant obstacle to avoiding the new tariffs.
The Trump administration also wants preferential access to Canadian critical minerals, according to CBC. The White House needs the minerals to replenish weapons stockpiles that have been depleted during the war with Iran, according to CBC.
Meanwhile, the Canadian side is reportedly pushing for the U.S. to lower existing tariffs on steel, aluminum and copper, which range from 10 to 50%. They also want relief from the U.S.’s 45% tariffs on softwood lumber, although CBC reports the Trump administration doesn’t plan to budge on those.
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