Trump, Carney hold talks as new US tariffs loom

Canada's Prime Minister Mark Carney engaged in crucial discussions with US President Donald Trump on Tuesday, seeking to prevent new US tariffs from being imposed on Canadian goods, according to Ottawa. The midnight deadline loomed for these tariffs, which President Trump had previously signed into effect, citing perceived discriminatory treatment by Canada against US products like alcohol, automobiles, and dairy.

The tariffs, set to take effect on Wednesday, would affect items such as wine, hockey sticks, and cement, covering about 5.5 percent of Canada's exports to the United States, valued at approximately US$20 billion, according to Oxford Economics.

Carney had spoken with Trump by phone on Monday about these trade negotiations, with both parties acknowledging the intense and delicate nature of the discussions. Overall, the new tariffs would target around 5.5 percent of Canada's exports to the US, with particular impact on central Canada's manufacturing sector. Canadian negotiators had been in Washington to secure a deal that would avert the tariffs and also seek relief on sector-specific duties, which have adversely affected industries like automobiles, steel, lumber, and aluminum in Canada.

Ottawa reportedly offered concessions, such as urging provinces to reintroduce US alcohol and wine on their shelves, but the possibility of an imminent deal remained uncertain.

Former US commerce official Christopher Padilla noted that trade negotiations often extend to the deadline, and he expected that the Trump administration had threatened new tariffs to secure early concessions from Canada during ongoing negotiations over renewing the US-Mexico-Canada Free Trade Agreement (USMCA). Even if an acceptable pact was reached, Trump might reject it, as he has a history of penalizing allies for other political concerns.

The relationship between the United States and Canada has been challenging from the outset, and Trump has demonstrated a tendency to lash out at allies when frustrated on other fronts.

Oxford Economics predicts that sectors most adversely affected by the new tariffs include cement, paper, printing, wood, clothing, and electronics equipment manufacturers. The tariffs, which do not apply to energy, potash, or goods already subject to sector-specific tariffs, are expected to impact products covered by the USMCA. US Trade Representative Jamie Greer stated that the tariffs were aimed at holding Canada accountable for its retaliatory measures against the United States.

Provinces had already restricted US alcohol products on their shelves and provided better market access to dairy products from the European Union.