US and Canada Race to Clinch Deal Ahead of Trump's Tariff Deadline

Two days before the tariff deadline, senior trade negotiators from Canada and the US were still hard at work in Washington, DC, to finalize a deal aimed at preventing the 50% import tariffs that US President Donald Trump has threatened to impose on approximately $20 billion worth of Canadian goods.

Friday's talks came after the tariffs were postponed earlier in the week. Many experts expressed optimism about the possibility of a last-minute breakthrough, similar to previous occasions.

Vina Nadjibulla, co-founder and CEO of the Centre for Strategic Statecraft, a non-partisan Canadian think tank, said: “All signs point to a deal being finalized before the current extension period ends. Or at most, there could be another extension and negotiations will stretch into next week.”

However, Nadjibulla cautioned that even if a deal is reached, the US will not remove all tariffs on Canadian goods. Such an agreement could mark a cooling in the strained relationship that has persisted over the past 18 months.

Background of Tensions

In 2025, early in his second term, Trump imposed tariffs on key imports from Canada, prompting Ottawa to respond with a series of countermeasures. Since then, the two countries have engaged in repeated back-and-forth actions, with Trump periodically issuing new tariff threats.

The latest round of tariffs, announced in late July, was Trump's response to what he called Canada's “discriminatory treatment of American products.” Trump warned he would impose new 50% tariffs at 12:01 a.m. Saturday Eastern Time (04:01 GMT) if no deal was reached, pushing back the deadline from Wednesday.

Canada's minister in charge of trade with the US, Dominic LeBlanc, did not speak to reporters upon arriving at the talks. Earlier, on Thursday, he had a meeting lasting more than three hours with US Trade Representative Jamieson Greer and said the two sides were “very close” to a deal, but there was still much work to be done.

A Difficult Puzzle for Carney

Even if a deal is reached, Canadian Prime Minister Mark Carney may face difficulty convincing the public and the influential premiers of the 10 provinces and three territories, because tariffs affect each region in different ways.

Research firm Leger Opinion released a poll on Wednesday showing that 56% of Canadians do not want Carney to make further concessions. Sources said a deal is expected to reduce tariffs on Canada-made vehicles from 25% to 15% and cut in half tariffs on Canadian steel and aluminum to 25%. Ontario, a major steel- and aluminum-producing province, wants these tariffs removed entirely.

Carney is urging major provinces to lift bans on US alcohol sales, an issue that has been a significant irritant for Washington. Nadjibulla remarked: “For Carney, the politics of this issue are truly complex because Canadian public opinion opposes anything that looks like a concession to the US, so the prime minister is in a very difficult position.”

Manitoba Premier Wab Kinew declared on Thursday that Trump is “very weak” and Canada should seize the opportunity: “I think we have the upper hand; they are losing momentum. They are coming to us to reach a deal, so I think we should fight.”

However, Canada's economy is only about one-tenth the size of the US, and it exports roughly 70% of its output to its southern neighbor. This makes Canada particularly vulnerable to Washington's punitive trade actions.

Rachel Ziemba, a senior fellow at the Center for a New American Security, commented: “Politically, Canada needs a decent deal that Carney can sell at home. But the economic benefit of this is also for the US, because Trump's higher tariffs are contributing to rising inflation for American consumers.” She also noted that the details of any agreement will be crucial: which goods are exempt and to what extent could affect ongoing negotiations over the US-Mexico-Canada trade agreement.

US Pressure Tactics

While experts point out that US tariffs are driving up prices for consumers, the Trump administration is using confrontations with Canada to rally its nationalist base. On Wednesday, US Vice President JD Vance mocked Carney, saying he “came and puffed out his chest and said, ‘I will be stronger than Donald Trump.’”

In a recording obtained by the Canadian Press news agency, Vance also spoke disparagingly about the tariff talks: “It's funny because Carney is presenting this as a victory for Canada when essentially, they have conceded on a lot of issues.”

Vance made the remarks at a fundraiser in Southampton, New York. The recording has added pressure on Carney's government to avoid concessions in the latest trade negotiations and focus on Canada's national interests.