Trade negotiators from the United States and Canada convened on Wednesday as a three-day pause on planned tariffs expired, with a new deadline set for Saturday at 12:01 a.m. ET.
The temporary reprieve halted 50% tariffs on approximately $20 billion worth of Canadian goods, imposed under Section 338 of the Tariff Act of 1930. The measures target Canadian policies covering U.S. alcohol, dairy products, and automobiles, according to a White House proclamation. Unlike previous tariffs, these would apply regardless of eligibility under the U.S.-Mexico-Canada Agreement (USMCA).
Auto tariffs remain a central point of contention. The U.S. currently imposes a 25% tariff on imported Canadian vehicles and parts, a rate automakers expect to be reduced. Canada has proposed lowering the tariff to 10%, while the U.S. has offered a 15% rate. The scope of any reduction—whether it applies to medium- and heavy-duty vehicles or only passenger cars and trucks—remains unresolved. Canada also seeks clarity on whether regional content from Mexico, the U.S., or Canada can be deducted when calculating tariff eligibility.
U.S. Trade Representative Jamieson Greer indicated that any agreement would include provisions for comprehensive market access, economic security commitments, digital trade alignment, and other measures. Canadian Prime Minister Mark Carney described "substantial progress" in negotiations but noted "important work" remained.
Public sentiment in Canada appears to favor a firm stance. A Leger poll published Wednesday found 56% of Canadians opposed further concessions to the U.S. The Canadian Chamber of Commerce echoed the urgency, with CEO Candace Laing stating that the current "limbo state" benefits no party and that "time is of the essence."
The Keystone XL pipeline, canceled by President Joe Biden in 2021, has resurfaced in discussions. Former President Donald Trump suggested in a Truth Social post that the project "may be awoken from the grave," though its role in current trade talks remains unspecified. Canadian officials have not confirmed whether pipeline revival is part of the negotiations.
A deal must be reached by the weekend deadline to avert the imposition of new tariffs. Negotiators are under pressure to finalize terms before the Saturday deadline, with both sides emphasizing the need for a resolution that addresses longstanding trade irritants while aligning with broader economic and security objectives.
