Canadian Officials Extend Washington Talks as Trade Deal Deadline Looms
Dominic LeBlanc, the minister responsible for Canada-U.S. trade, is scheduled to stay in Washington over the weekend as negotiators aim to bridge the significant policy divide that remains ahead of the Wednesday deadline for a trade deal set by U.S. President Donald Trump.
The President has threatened to impose new 50-per-cent tariffs on US$20-billion worth of Canadian electronics, dairy, alcohol and other products, using Section 338 of the Smoot-Hawley Act, as of Aug. 19.
Canadian negotiators are urging the United States to shelve that plan, while also pushing for a deal that would see an easing of earlier U.S. tariffs on Canadian steel, aluminum, autos and softwood lumber.
Janice Charette, Canada’s chief trade negotiator, is also scheduled to remain in Washington. She and the Minister briefed provincial and territorial trade ministers and the federal government’s Canada-U.S. economic relations advisory committee in the afternoon, Mr. LeBlanc’s office said.
Candace Laing, president and chief executive of the Canadian Chamber of Commerce and a member of the advisory committee, said Canadian and American negotiators are not yet close to a deal.
As a result, she said her chamber members are preparing for the real possibility that the new wave of U.S. tariffs could materialize.
“The good news is they are busy talking multiple times a day,” she told The Globe in an interview.
Ms. Laing said the advisory committee discussed Friday that provinces with retaliatory U.S. alcohol bans or restrictions on government procurement will need to be ready to reverse those policies in the event a deal is reached.
Canada and the U.S. have discussed critical minerals and defence in their continuing trade talks, and progress on those areas is expected to influence the deal, according to three Canadian and one U.S. source with knowledge of the negotiations.
The plan is still to conclude a “phase one” deal in which Canada would receive reductions in the President’s tariffs in exchange for conceding on a list of U.S. trade demands, before later dealing in detail with critical minerals and defence in “phase two.”
But Canada’s willingness to work with the U.S. on those areas, and potentially offer tacit agreement on some of its demands, could influence the contours of the first-phase deal, the sources said.
The U.S. is demanding a right of first refusal on Canadian critical minerals; that Canada complete its purchase of U.S. F-35 fighter jets; that Ottawa buy U.S. tech such as radar planes as part of joining Mr. Trump’s planned Golden Dome missile defence system; and that Washington receive some guarantee on future supplies of oil and gas, one Canadian and one U.S. source said.
The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the closed-door talks.
One industry source said a challenge for Canadian negotiators is that the U.S. side does not seem open to granting similar levels of tariff relief to the priority sectors of steel, aluminum, autos and softwood lumber. The source said Canadian negotiators are pushing for relief for all of those sectors.
Another point of concern is that the U.S. side has not indicated a willingness to extend the Aug. 19 deadline to allow talks to continue.
U.S. Trade Representative Jamieson Greer, who met with Mr. LeBlanc and Ms. Charette for 90 minutes at his office near the White House on Thursday, spent Friday at the Iowa State Fair.
Speaking with reporters there, he said he’d had “very detailed discussions” with his Canadian counterparts.
“We’re having what I call constructive negotiations with the Canadians. At the end of the day, President Trump, the United States, we’re going to do what is best for America,” he said, adding that “for decades, we’ve had major trade issues with Canada.”
One of the Canadian sources said the Thursday meeting went well and there was optimism for a deal. The source said that it did not appear, however, that Mr. Trump was being apprised of every development at the negotiating table, which left the possibility that he would scupper an agreement or make additional demands.
The deal under discussion would see Mr. Trump lower – but not fully get rid of – his tariffs on Canadian steel, aluminum, autos and forest products, as well as refrain from hitting more products with tariffs on Aug. 19.
In exchange, Canada would eliminate its retaliatory tariffs on U.S. autos, agree to Washington’s interpretation of how dairy quotas should be allocated, and have provincial governments stop their Buy Canadian programs and boycotts of American alcohol, among other things.
U.S. demands for “phase two” of the talks have loomed over the negotiations, the sources said.
The U.S. source said one possibility is Canada making a quiet, informal pledge to complete the F-35 purchase with the formal announcement held back until a second-phase deal. One Canadian source said Ottawa might bargain its willingness to fulfill U.S. demands on critical minerals in a future deal for lower tariff numbers in this first-phase agreement.
Another Canadian source said Ottawa’s officials had discussed making a pitch on critical minerals and defence as part of a closing offer to get the deal over the finish line.
Prime Minister Mark Carney last year promised to seek a grand bargain with Mr. Trump covering trade, defence and border security. His original hope was to entirely get rid of U.S. tariffs imposed under Section 232 of the Trade Expansion Act.
But Mr. Trump walked away from talks last October over an Ontario government antitariff ad. Negotiations resumed in the spring but made little headway.
Another complication is that Ottawa will need provincial co-operation to make a deal happen, as ending the alcohol boycotts is one of the key demands.
British Columbia Premier David Eby declined to say Friday whether his government would be willing to lift its ban on U.S. alcohol in exchange for a new trade deal.
Mr. Eby said B.C.’s clear priority is for the U.S. to lower tariffs on Canadian softwood lumber.
Ontario Finance Minister Peter Bethlenfalvy told reporters at Queen’s Park on Friday that alcohol “remains a tool” in the negotiations.
“We need a deal that takes into account our steel industry, our manufacturers, our auto sector, our lumber and derivate products. So we need to see a good deal, a fair deal, a hard-driven negotiated deal,” he said.
UNIFOR president Lana Payne said Friday that Canada should stand firm in the negotiations.
“We shouldn’t be offering any concessions to the United States right now,” she said at a news conference in Toronto. “If we don’t get a deal by August 19th, there is only one path for Canada in these trade talks and that is to retaliate and to retaliate hard against these unjustified tariffs that we’re currently facing.”
This article was first reported by The Globe and Mail
