Canada, U.S. dig in on tariff negotiations as deal hopes fade

With only a dozen hours remaining until the midnight deadline, the United States is poised to impose 50 percent tariffs on Canada, threatening to disrupt an already delicate trade relationship. Prime Minister Mark Carney and President Donald Trump exchanged phone conversations on Monday and Tuesday, but no details of their discussions have been disclosed. Canada-U.S. Trade Minister Dominic LeBlanc and chief negotiator Janice Charette are in Washington, D.C., striving to negotiate a deal with their American counterparts.

The tariffs, known as Section 338 tariffs, could impact nearly $28 billion in annual Canadian exports to the United States, according to John Boscariol, a partner at McCarthy Tétrault. These tariffs, targeting a broad range of goods, would be especially detrimental to the forestry sector, which had previously benefited from tariff-free access under the United States-Mexico-Canada Agreement (CUSMA).

Canada's lumber industry is facing significant challenges, with the new tariffs acting as yet another significant blow. Forestry producers, such as Derek Nighbor from the Forest Producers Association, emphasize that these tariffs will further strain an already fragile industry.

The Section 338 tariffs are a response to perceived discriminatory measures by Canada, including the provincial and territorial boycotts of American alcohol products and retaliatory tariffs on U.S.-made vehicles and auto parts. Canadian provinces had removed U.S. alcohol from their shelves in response to Trump's trade war in early 2025. Trump has also introduced quotas on American dairy imports under Canada's supply management system.

As the deadline looms, Canada and the United States continue to negotiate, hoping to present a draft deal to Carney and Trump for approval before the midnight deadline.