The United States and Canada are holding last-minute negotiations to prevent the imposition of 50 per cent tariffs on about $20 billion worth of Canadian goods.
The tariffs are scheduled to take effect at 12:01 a.m. on Wednesday, raising fresh concerns over the future of trade relations between the two long-standing allies.
The proposed duties would affect a range of Canadian products, including hockey sticks, tongue depressors and other goods.
Canadian Prime Minister Mark Carney said on Monday that talks with Washington were “very intense and delicate”, adding that it was not the right time to discuss the negotiations publicly.
The dispute comes amid growing tensions between the two countries over trade. President Donald Trump has repeatedly imposed tariffs on Canadian goods as part of his push to bring manufacturing back to the United States.
Trump has also repeatedly spoken about making Canada the 51st US state, comments that have angered many Canadians.
About 72 per cent of Canada’s goods exports went to the United States last year, highlighting the country’s heavy dependence on the American market.
The proposed tariffs could also affect American consumers because US importers would initially pay the duties and could pass the additional costs on through higher prices.
Trade experts believe both sides have strong reasons to reach an agreement, particularly with US voters already concerned about the cost of living ahead of November’s midterm elections.
Ryan Majerus, a partner at King & Spalding and former US trade official, said neither side appeared eager to allow the tariffs to take effect.
The United States is reportedly seeking greater Canadian purchases of American military equipment, including F-35 fighter jets, participation in Trump’s “Golden Dome” missile defence programme and increased access to Canada’s critical minerals.
Canada, meanwhile, wants relief from US tariffs on steel, aluminium and softwood lumber.
Trump is using Section 338 of the Tariff Act of 1930 to impose the 50 per cent tariffs. The provision allows the US president to impose duties of up to 50 per cent on imports from countries deemed to have discriminated against American businesses.
The measure is notable because Section 338 has never previously been used to impose tariffs.
Trump has accused Canada of discriminating against US exports, particularly automobiles, alcohol and cheese.
The tariff dispute is also unfolding as Washington and Ottawa renegotiate the United States-Mexico-Canada Agreement, which governs trade between the three North American countries.
The threat of the new tariffs is giving Washington additional leverage in those negotiations, but Canadian officials face domestic pressure not to make concessions that could be seen as surrendering to Trump’s demands.
Canada could also retaliate if the tariffs take effect, potentially escalating the trade dispute.
Canada’s Minister for US Trade, Dominic LeBlanc, met with US Trade Representative Jamieson Greer on Monday but offered little detail afterwards.
“The work is continuing,” LeBlanc said. “We continue to do our job.”
