Prime Minister Mark Carney of Canada was
less definitive about what the intense talks produced, saying ‘important work’
remained.
·
President
Donald Trump delayed the planned 50% tariffs on Canadian goods for three days, roughly 90 minutes before the midnight
deadline.
·
Trump
said the pause was granted because the
U.S. and Canada had reached a deal in principle, subject to finalizing documents.
·
Canadian
Prime Minister Mark
Carney took a more cautious position,
saying that “substantial progress” had been made but that important work
remained.
·
The
proposed tariffs would affect hundreds
of Canadian products worth an estimated $20 billion in exports, according to the Trump administration.
·
The
U.S. Trade Representative said the prospective agreement would include:
o Comprehensive market access for U.S. goods
o Economic-security commitments
o Digital-trade alignment
o Measures designed to protect the U.S.
market
·
Canada’s
key demands
include:
o Reduction or removal of U.S. tariffs of up
to 50%
on Canadian steel, aluminum and automobiles
o Relief from higher U.S. tariffs on
Canadian lumber
·
U.S.
demands on Canada
include:
o Ending provincial boycotts of American
wine and spirits
o Removing Canadian retaliatory tariffs on
U.S. automobiles
o Improving access for U.S. dairy products
into Canada’s protected dairy market
·
Trump
claimed Canada had expressed
a commitment to address these issues
as part of the prospective agreement.
·
Trump
also revived discussion of the Keystone
XL pipeline,
suggesting that the long-cancelled Canada-U.S. oil pipeline could potentially
be revived.
·
The
pipeline was cancelled by the Biden administration in 2021, although renewed
interest has emerged after a U.S. company filed an application for a new
pipeline bringing Canadian oil into the United States.
·
The
immediate negotiations are part of a larger
renegotiation of the United States-Mexico-Canada Agreement (USMCA).
·
Trump
has increasingly used the threat of tariffs as negotiating leverage to force Canada to address U.S. concerns
over market access and trade policies.
·
Carney
has made some concessions but has increasingly emphasized reducing Canada's economic dependence on
the United States and
building a more independent Canadian economy.
·
Trump’s
trade policies have significantly strained Canada-U.S. economic relations,
undermining decades of relatively free trade arrangements dating back to 1989.
·
The
uncertainty has also affected Canadian consumer behavior,
including a sharp
decline in Canadians travelling to the United States.
·
An Abacus Data poll found that 74% of Canadians said U.S.
trade actions had already affected their households, with 30% describing the
impact as major.
·
The 50% tariffs now on hold would have been imposed under a different
U.S. trade law from the steel, aluminum and auto
tariffs, which remain in force under separate legal authority.
·
Canadian
business groups welcomed the three-day reprieve but warned that a temporary delay does not provide the
certainty businesses need.
·
The
U.S. spirits industry strongly welcomed the prospect of an agreement, saying
Canadian provincial restrictions had caused American spirits exports to Canada to
fall by more than 70%.
·
Key
takeaway: The
three-day extension provides temporary relief but is not yet a confirmed trade agreement. The major unresolved issues remain U.S.
tariffs on Canadian industrial goods, Canadian retaliatory measures, market
access and the broader future of the USMCA.
Canada
got a three-day reprieve on damaging new American tariffs against billions of
goods, with President Trump claiming that a deal was close but Prime Minister
Mark Carney saying only that substantial progress had been made.
Mr.
Trump announced the delay on imposing 50 percent tariffs in a social media post
on Tuesday night, roughly 90 minutes before the midnight deadline. The White
House issued a proclamation saying Canada had agreed to make certain trade
concessions, and the extra days were needed to finalize those provisions.
“I
have paused the 50% Tariffs against Canada, that were scheduled to kick in
tomorrow morning for a three day period, based on the
fact that Canada and the U.S.A., subject to the finalization of documents, have
a DEAL!” Mr. Trump said.
Mr.
Trump has previously announced deals with other countries, only to have them
fall through — including a recent series of elapsed agreements with Iran. In a
brief statement, Mr. Carney was less definitive about what the talks have
produced.
“Over
the last number of weeks, Canada has engaged in intensive discussions with the
United States to address outstanding trade issues,” he said. “Substantial
progress has been made, although there is important work still to be done.”
Reflecting
his pivot away from Canada’s economic dependence on the United States, Mr.
Carney added: “Canada remains focused on building a stronger, more independent,
and more competitive economy at home.”
In
a social media post, the Office of the United States Trade Representative,
which was carrying out the negotiations, said the deal would “include
comprehensive market access for all American goods, economic security
commitments, digital trade alignment” and other provisions that would protect
the U.S. market.
Entering
the negotiations, Mr. Carney said that he was attempting to avert the new
tariffs, which, if put in place, would affect hundreds of products that
account, by the Trump administration’s estimates, for $20 billion in Canadian
exports.
Mr.
Carney said last month that “our objective is not to reach a deal whatever it
costs” with the United States. But he has also made it clear that Canada would
make any agreement contingent on eliminating or reducing tariffs of up to 50
percent on Canadian steel, aluminum and autos
introduced last year. Canada also is seeking relief on tariffs against Canadian
lumber that date back decades and were increased by Mr. Trump.
The
United States, in turn, was looking for an end to the boycotts of American wine
and spirits in some provincial alcohol distribution systems that followed Mr.
Trump’s earlier tariffs. It was also seeking an end to Canada’s retaliatory
tariffs against imports of American automobiles and changes to how some
American dairy products are allowed to enter Canada’s largely closed market. In
the presidential proclamation, Mr. Trump claimed that Canada had “expressed a
commitment” to address all those issues.
Mr.
Trump linked the looming agreement to the Keystone XL, a major pipeline project
that would have transported oil from Canada to the United States Gulf Coast,
but was scrapped by the Biden administration in 2021. The project had been
approved during the first Trump administration.
“The
great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken
from the grave!” Mr. Trump added on his social media post.
Despite
being considered largely dead for five years, speculation that a new project,
closely mirroring Keystone XL, could return grew this year as a U.S. company
filed an application in Montana to build a pipeline bringing in Canadian oil.
Mr. Carney had brought up the possibility of resurrecting the project with Mr.
Trump during a White House visit last year.
The
trade talks have been a prelude to a larger negotiation, over the future of the
North American trade agreement. The United States and Mexico have carried out
several rounds of talks over the United States-Mexico-Canada Agreement, which
Mr. Trump signed in his first term, but has since started to criticize. For
U.S. officials, the threat of tariffs has been a way to amass negotiating
leverage over the Canadian government, while also forcing Canada to act on
trade issues they deem unfair.
While
Mr. Carney has pulled back some of Canada’s trade retaliation and made other
concessions to the United States, he has seemed far less willing to discuss
giving anything more to the United States since Mr. Trump announced the
sweeping 50 percent tariffs in July.
Since
his return to office, Mr. Trump has started a trade war with Canada that has
shredded free-trade agreements going back to 1989 while stoking anger and fear
among Canadians. In Canada, frustrations have been expressed in a various ways, including a drastic decline in vacation travel
by Canadians to the United States.
In
a poll by Abacus Data released on Monday, 74 percent of respondents said that
American trade actions had already affected their households, with 30 percent
describing the effects as “major.”
While
the Supreme Court struck down most of Mr. Trump’s tariffs in February, the
steel, aluminum and auto tariffs against Canada were
brought under another law that was not covered by that decision. The tariffs
now on hold were to be made under another law, an untested trade provision from
1930.
A
conversation between Mr. Trump and Mr. Carney resumed trade talks in late July.
The United States broke off negotiations last fall on steel, aluminum and autos after the province of Ontario placed
television ads in the United States that featured clips of President Ronald
Reagan, who signed the 1989 free trade agreement with Canada, warning about the
dangers of tariffs.
News
of the three-day reprieve brought some relief in Canada, but industry leaders
highlighted that the prolonged uncertainty was damaging.
“Let’s
be clear: the tariff delay provides relief on both sides of the border,”
Candace Laing, who leads the Canadian Chamber of Commerce, said in a statement.
“Businesses may not be closing up shop with this news, but an extension doesn’t
bring the certainty that a signed interim deal would,” she added.
In
the United States, the chance of a breakthrough on some Canadian measures was
eagerly anticipated. In a statement, Chris Swonger, the president of the
Distilled Spirits Council of the United States, said he appreciated Mr. Trump’s
effort to restore access for American spirits after more than a year and a half
of sales bans.
“These
provincial bans have caused exports of American spirits to drop by more than 70
percent, leaving American distillers caught in the middle of a broader trade
dispute,” he said.