Canada, US inch toward trade deal as tariff deadline looms

The two countries are racing toward a trade agreement with a Friday deadline hanging over the table. Prime Minister Mark Carney and President Donald Trump both declared victory on Wednesday, even as negotiators were still hammering out the final language. Trump had threatened a fresh round of tariffs on Canadian goods, but paused them to allow the talks to continue. The two leaders are betting that what emerges will satisfy their own constituencies—though that bet looks increasingly uncertain on the Canadian side.

The broad shape of the deal has begun to emerge, though official details remain unannounced. American tariffs on Canadian steel and aluminum would fall from 50 percent to 25 percent. Vehicle tariffs, currently at 25 percent, could drop to 15 percent. These are substantial reductions, the kind that would matter to manufacturers and exporters on both sides of the border. Trump told reporters that Canada has agreed to eliminate its tariffs on American agricultural products, though he was vague about which sectors would benefit. When asked whether the US would reciprocate with its own tariff cuts, Trump said only "by a little bit"—a characteristically noncommittal answer that left room for interpretation.

Carney framed the emerging agreement as a win for Canada's "most important strategic sectors." He met with his cabinet and provincial leaders on Wednesday afternoon to brief them on the state of play. One detail that emerged from those conversations: Canada is preparing to restore American alcohol to store shelves. Most Canadian provinces had banned US alcohol in retaliation for Trump's tariffs, and the US has been pressing hard for that ban to be lifted. Nova Scotia Premier Tim Houston, after meeting with Carney, acknowledged the request with a shrug—the US had wanted this "for so many reasons," he said, though whether Canadians would actually buy the stuff once it returned was "a whole other discussion."

What Canada is not giving up, at least not according to Trade Minister LeBlanc, is its dairy supply management system. The US has been asking for concessions on dairy quotas to allow American cheese producers greater access to the Canadian market. But LeBlanc was firm: the system that oversees production quotas, pricing, and import restrictions on dairy, eggs, and poultry would remain "entirely intact." This matters because public opinion in Canada is running against major concessions. A Leger poll found that 56 percent of Canadians surveyed wanted their government to take a hardline approach in these negotiations. The Carney government is clearly aware it cannot afford to look like it has caved.

US Trade Representative Jamieson Greer, speaking after a 45-minute meeting with his Canadian counterpart on Wednesday, said the Americans were "very happy" with the direction of talks. The deal, he said, would eliminate "some of the irritants" the US had with Canada and would "not only continue to protect American workers, American jobs, American supply chains, but really strengthen the North American economy." He said he would brief Congress and US stakeholders on the details soon.

Business leaders on both sides of the border have been pushing hard for a deal, warning that additional tariffs would harm both economies. Dennis Darby, president of Canadian Manufacturers and Exporters and a member of Carney's advisory committee on Canada-US trade, told the BBC he was optimistic. "The committee was informed this morning that the negotiations continue and that we're close, and that's more positive than we've seen in some time," he said. Darby and others in the business community are hoping this agreement is just the opening move toward something larger—a return to the terms of the USMCA, the North American free trade agreement, with most goods flowing tariff-free across all three countries.

The Friday deadline is real, but deadlines in trade negotiations are often more flexible than they sound. What matters now is whether Carney can sell whatever emerges to a skeptical Canadian public, and whether Trump can convince his own base that the deal protects American interests. Both leaders are claiming victory before the ink is dry, which suggests they are both nervous about how their own people will react once the details become public.