WASHINGTON — The United States and Canada are holding urgent, last-minute negotiations to prevent a new round of 50% U.S. tariffs on roughly $20 billion in Canadian imports from taking effect Wednesday, as both governments try to contain a widening trade dispute between two of the world’s closest economic partners.
The proposed tariffs would affect more than 500 categories of Canadian products, ranging from wine, dairy products and furniture to cement, clothing, fishing rods and hockey equipment. If implemented, the duties would cover about 5% of the $383 billion in goods the United States imported from Canada in 2025, according to U.S. Census Bureau data cited by Reuters.
Canadian Prime Minister Mark Carney said negotiations were “delicate” and “intense,” while declining to discuss the details publicly. He said he expected to speak with President Donald Trump before the deadline.
Canada’s minister responsible for U.S. trade relations, Dominic LeBlanc, and the country’s chief trade negotiator, Janice Charette, have spent days in Washington meeting with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. But no agreement had been announced as the deadline approached.
“Our job is not yet done,” LeBlanc said Monday after a meeting with Greer, according to the BBC.
The talks are about more than one new round of tariffs. Ottawa is seeking a broader agreement that would stop the planned 50% duties while also securing relief from existing U.S. tariffs on Canadian steel, aluminum, automobiles and softwood lumber. Washington, meanwhile, is seeking concessions from Canada on measures it views as unfair to U.S. producers and exporters.
What the new tariffs would cover
The Trump administration’s proposed duties would take effect at 12:01 a.m. Wednesday unless the two countries reach a deal or the United States delays the measures.
The White House has said the tariffs would apply to a broad list of Canadian goods, including wine, certain dairy products, furniture, clothing, cement, plywood, fishing rods, hockey equipment and other consumer and industrial products.
The list is notable both for its scope and for its symbolism. It targets goods that range from basic household products to items closely associated with Canadian identity, such as hockey equipment. For businesses, the consequences would be more immediate: higher import costs, potential price increases for U.S. consumers and reduced demand for Canadian suppliers.
Not all Canadian exports would be affected. Reuters reported that energy products, potash, fish, and critical minerals are excluded from the new duties.
Those exemptions matter because Canada is a major supplier of oil, natural gas, fertilizer ingredients and minerals used in manufacturing and clean-energy technologies. Excluding them could limit the impact on sectors where U.S. buyers depend heavily on Canadian supply.
Still, the tariffs would strike a significant group of businesses, including manufacturers and exporters that have already faced uncertainty from the broader U.S.-Canada trade conflict.
Canadian industry groups have warned that the new levies could cause job losses in sectors already under pressure from existing tariffs and slower economic growth.
A 1930s-era trade law
Trump invoked Section 338 of the Tariff Act of 1930 to impose the new duties, according to Reuters. The law, created during the Great Depression, gives the president authority to impose new tariffs when another country is found to discriminate against U.S. commerce.
The use of Section 338 is unusual. The measure has received relatively little use in modern U.S. trade policy, but it provides the administration with an additional legal mechanism for raising import barriers as it seeks to reshape trade relationships.
The Trump administration has argued that Canada has treated some U.S. products unfairly. The dispute includes longstanding disagreements over dairy-market access, provincial alcohol sales rules and Canadian industrial policies.
U.S. officials have pressed Canada to make American alcohol more readily available in provincial liquor stores. Some Canadian provincial leaders have said they could consider restoring U.S. alcohol products to store shelves if Washington makes meaningful tariff concessions.
The timing is particularly sensitive because both countries are preparing for a review of the United States-Mexico-Canada Agreement, or USMCA, the regional trade pact that replaced the North American Free Trade Agreement in 2020. The agreement is scheduled for formal review in 2026.
Canada wants the tariff dispute contained before it becomes a wider threat to the trade relationship. The United States, meanwhile, appears to be using the negotiations to press for changes it wants before or during the USMCA review process.
Canada seeks wider relief
Ottawa’s goal is not only to avoid the new Section 338 tariffs. Canadian officials are also pushing for relief from existing U.S. duties affecting steel, aluminum, automobiles and softwood lumber.
Those industries have particular economic and political importance in Canada. Steel and aluminum producers are concentrated in industrial regions of Ontario and Quebec. Auto manufacturing is deeply integrated across the U.S.-Canada border, with parts and vehicles often moving between the two countries several times during production. Softwood lumber has been a recurring source of trade tension for decades, particularly between Canadian producers and U.S. homebuilders.
The United States has argued that Canadian lumber receives unfair government support because much of the country’s forestland is publicly owned and administered. Canada disputes that characterization and has repeatedly challenged U.S. duties through trade mechanisms.
The new negotiations could include lower U.S. tariffs on Canadian autos and auto parts that comply with USMCA rules. One proposal discussed in talks would reduce the current 25% tariff on qualifying Canadian autos and parts to a rate between 10% and 15%, according to Global News, citing a source familiar with the negotiations.
Such a reduction would still leave tariffs in place, but Canadian officials may view it as a more manageable outcome than the current rate.
The talks appear to be moving toward a possible partial agreement rather than a complete return to tariff-free trade. Reports suggest any deal accepted by the Trump administration could retain some duties on industrial sectors, even if Washington postpones or withdraws the new 50% tariffs.
That prospect creates a difficult political calculation for Carney’s government. A deal that reduces some tariffs may protect jobs and provide certainty, but it could also be criticized at home if Canada is seen as accepting permanent U.S. trade barriers.
High stakes for integrated economies
The United States and Canada have one of the world’s largest bilateral trading relationships. Their economies are closely linked through energy, automobiles, agriculture, construction materials, consumer goods, and manufacturing supply chains.
For many companies, the border is part of a production system rather than a dividing line between separate markets. An automotive part may be manufactured in Ontario, assembled in Michigan, returned to Canada for additional work and incorporated into a vehicle sold in the United States or elsewhere.
Tariffs disrupt that system by raising costs at each border crossing. Even when duties target a narrow product category, uncertainty can lead companies to postpone investment, change suppliers, or pass costs on to buyers. The tariff rate proposed at 50% is particularly interesting. A duty of that size can make imported goods substantially more expensive and may be too high for some exporters to absorb. Businesses could reduce shipments, lose U.S. customers or move production to avoid the tariff.
U.S. consumers could also face higher prices. Imported wine, dairy products, furniture and certain building materials may become more expensive if distributors and retailers pass along increased costs. The impact would vary by product and whether businesses can find alternative suppliers.
Construction-related products such as cement and plywood could be particularly sensitive in regions where Canadian supply is important. Higher material costs can affect builders, contractors, and eventually homebuyers or renters.
What each side wants
Canada is reportedly prepared to offer targeted concessions in an attempt to secure a deal. The New York Times reported that Carney had instructed Canadian officials to propose specific measures that could prevent the new tariffs and ease existing duties on key exports.
The precise concessions have not been made public, but trade discussions have included provincial alcohol restrictions, dairy access and possible adjustments to Canadian countermeasures previously imposed in response to U.S. tariffs.
For Washington, the talks are part of a broader strategy that uses tariffs as leverage in negotiations. The administration has repeatedly argued that trade partners should make concessions to reduce what it considers unfair barriers to U.S. goods.
For Ottawa, the priority is stability. Canadian negotiators are seeking a framework that provides planning certainty for exporters, protects vulnerable sectors and preserves the broader USMCA relationship.
The two goals overlap only partially. The United States wants measurable concessions; Canada wants durable tariff relief. Reaching a compromise will require both sides to accept something short of their preferred outcome.
The deadline and what comes next
If no deal is reached, the new 50% tariffs are scheduled to take effect Wednesday. Canada could respond with countertariffs, pursue legal challenges or seek further negotiations after the duties begin.
Retaliation would risk escalating the spat. In the past, Canada’s countermeasures on U.S. goods have hit politically sensitive products as a way to ramp up the pressure on Washington to act. But countertariffs also raise costs for Canadian consumers and businesses.
A last-minute agreement remains possible. Trade negotiations often continue until hours before a deadline, especially when leaders want to preserve leverage and avoid appearing to concede too early.
Carney’s expected conversation with Trump could be decisive. Political intervention at the highest level may unlock an agreement if negotiators have already narrowed the major gaps. It could also confirm that the two sides remain too far apart.
For now, companies on both sides of the border are preparing for uncertainty. Canadian exporters are assessing whether they can absorb a 50% tariff. U.S. importers are considering alternative supply sources. Consumers may soon see the consequences in prices for goods that move across the world’s longest international border.
The talks are not simply about wine, lumber, hockey sticks or industrial materials. They are a test of whether the United States and Canada can preserve the predictability that has underpinned North American trade for decades, or whether tariffs will become a more permanent feature of the relationship.