Canada, US continue trade talks as midnight tariff deadline looms

Trade negotiations in Washington resumed Friday morning between Canada and the US amid a looming midnight deadline for a 50% tariff on CAN$30 billion (US$22 billion) of Canadian goods to take effect.

Both sides have said they are close to an agreement, with US President Donald Trump going so far as to say Wednesday that a “very fair” agreement has been reached.

Nevertheless, negotiators are working at a feverish pace to get a deal before the midnight deadline. Trump announced the tariffs in retaliation for Canadian tariffs on US goods, which were in turn a response to American tariffs.

On the Canadian side, media reports earlier this week said Prime Minister Mark Carney only said that “substantial progress has been made.” Those who have insider knowledge of the talks told Canadian media outlets that any agreement would see the American tariffs on Canadian steel and aluminum cut in half, from 50% to 25%.

But to get that concession, Canadian negotiator Dominic LeBlanc must address three US trade complaints.

First, the automotive sector, where the US administration is unhappy with Canadian taxes and tariffs. Second, the Americans want access to the Canadian dairy market, where the administration objects to Canada’s strict supply management quotas. Third, the Americans want an end to an alcohol ban, under which Canadian provinces pulled booze off the shelves in retaliation for previous US tariffs.

On the liquor issue, the boycott has hurt American alcohol producers and Carney has received reluctant assurances from provincial premiers that the spirits will be back on the shelves. Quebec demands the trade deal be “globally positive” for that to happen.