US-Canada tariff clock ticks: Last-minute talks to avert Trump’s 50% tariffs

In a race against time, the United States and Canada work to finalize a tariff agreement before a midnight deadline set by President Donald Trump. Should no deal be reached, Trump plans to impose 50% tariffs on $20 billion worth of Canadian products, including items ranging from hockey sticks to tongue depressors. Canadian Prime Minister Mark Carney confirmed that negotiations were already underway, but declined to provide details, emphasizing that the talks are intense and delicate.

The trade disputes between the two nations are not new, with longstanding issues such as Canadian softwood lumber exports and US demands for greater access to Canada's dairy market fueling tensions. Despite these disagreements, the US and Canada maintain a close relationship as allies, friends, and major trading partners. Over 330,000 people and $2 billion worth of goods cross the border daily, with around 800,000 Canadians residing in the United States.

However, the relationship has been strained by President Trump's actions, including imposing tariffs on Canadian goods to stimulate manufacturing in the US and his repeated comments about making Canada the 51st state. These measures have angered Canada, with a petition calling for the expulsion of US Ambassador Pete Hoekstra gaining nearly 218,000 signatures.

Both countries have their own reasons to negotiate; Canada stands to lose nearly 72% of its goods exports to the US, while the US could suffer from higher consumer prices if importers pass on the costs, at a time when Americans are already concerned about rising living costs. The new tariffs would also come before the November midterm elections.

To mitigate the potential impact, both sides have outlined their interests. The US seeks Canadian participation in its 'Golden Dome' missile defense system and greater access to critical minerals. Meanwhile, Canada wants the US to ease tariffs on steel and aluminium and softwood lumber, arguing that the latter is subsidized unfairly.

Traditionally, US tariffs have been imposed under Section 301 of the Trade Act of 1974, but the 1930 provision, which Trump invoked for the current dispute, allows for more immediate action without the need for an investigation or a set time limit.