Trump, Carney to speak Tuesday night ahead of midnight tariff deadline

Prime Minister Mark Carney, right, speaks with U.S. President Donald Trump at a luncheon with leaders of the G7, in Évian-les-Bains, France, on June 16. (Evelyn Hockstein/Pool Photo/The Associated Press)

Photo: (Evelyn Hockstein/Pool Photo/The Associated Press)

John Paul Tasker (new window) · CBC News

Prime Minister Mark Carney will speak to his American counterpart on Tuesday by phone to try and hammer out a deal to avoid new U.S. tariffs on some $30 billion in Canadian goods due to take effect just after midnight, sources told CBC News.

The expected call follows one the two had on Monday evening on the same subject after a round of last-minute talks between their deputies in Washington, one of several such ministerial meetings over the last three weeks as both sides drive toward a deal to address American trade irritants and deliver some relief for Canadian industries grappling with punishing Trump administration tariffs.

When exactly the two will speak and whether there will be a deal to announce after that call is unknown. Sources have cautioned that Canada and the U.S. still remain at loggerheads over some of the finer points of a potential deal, including what sort of tariff, if any, will be applied for Canadian autos bound for the U.S.

CBC News is not identifying the sources because they were not authorized to publicly discuss the talks.

U.S. President Donald Trump has threatened to hit Canada with 50 per cent tariffs on a long list of Canadian products ostensibly in retaliation for Ottawa imposing tariffs on some U.S. goods, tariffs that were only levied after Trump launched his trade war on Canada last year.

If no deal is reached, those tariffs will take effect on Wednesday, leaving Canadian liquor producers, hockey equipment manufacturers, wood and paper producers and dozens of other entities facing higher U.S. tariffs.

WATCH | Carney avoids public comment on trade talks:

Carney avoids public comment on ‘delicate’ tariff negotiations

Prime Minister Mark Carney said last-minute tariff negotiations with the U.S. are delicate and intense as he plans to speak to President Donald Trump in the next 48 hours. Trump's threat to raise tariffs on a number of Canadian goods takes effect on Aug. 19.

At issue in these negotiations to stave off the new tariffs — called Section 338 tariffs in trade parlance — is just how much Canada can get out of the U.S. in exchange for a series of concessions of its own.

Canada-U.S. Trade Minister Dominic LeBlanc is pushing for the U.S. to scrap the Section 338 tariffs but also lower the existing Section 232 tariffs on industrial products like steel, aluminum, autos and lumber.

The Americans want U.S. liquor back on the shelves of provincially run stores, ending a boycott that has been devastatingly effective (new window). The Trump administration is also pushing for Canada's retaliatory tariffs on U.S. autos removed, and tweaks to how the supply-managed dairy sector allocates quotas.

U.S. Trade Representative Jamieson Greer has repeatedly signalled the U.S. is not open to dropping its tariff regime entirely, but there are some signs that the rate may be flexible if the Canadians address some U.S. demands.

Industry sources said there is a gap between what the Canadians want and what the Americans are willing to offer in some sectors in particular, like autos and steel.

Canada wants the U.S. to drive down tariff rates to the lowest possible level, and what's been presented so far by Greer and his team is not satisfactory, sources said.

On autos, the latest U.S. offer would lower the tariffs on Canadian-made vehicles to a headline rate of 15 per cent, down from the current 25 per cent. The headline rate would be the official rate enacted by executive order.

But the tariff on Canadian-made vehicles can be reduced further by having more U.S. content, down to an effective rate (the actual duty rate collected) of 7.5 per cent.

Sources said that is still higher than Canada wants.

There is substantial business pressure on Carney to cut a deal with Trump to normalize trade.

We need to find a way back with the U.S. because we are very connected and we need our companies to sell there, said Charlotte Laramée, the CEO of AluQuébec, an aluminum trade group.

For the aluminum industry, we've been living with uncertainty for 18 months, she said.

The U.S. Chamber of Commerce issued a statement on Tuesday calling for Canada and the U.S. to cut a deal to avoid more tariffs that could hurt businesses on both sides of the border.

The introduction of higher tariffs would damage both economies, drive up costs for U.S. families, further disrupt critical supply chains and risk the 13 million American jobs that depend on trade with Canada and Mexico, said Neil Herrington, the chamber's senior vice-president for the Americas, in a statement.

But there is also pressure from some sectors, notably dairy, to avoid giving away too much — or anything at all.

The U.S. government and American dairy groups are pressing Canada to allocate tariff-rate quotas (TRQs) directly to Canadian grocery retailers rather than restricting them solely to domestic dairy processors and distributors as they are now, a manoeuvre that could make it easier to sell U.S. milk and cheese in Canadian stores.

We've made it very clear to to this government that that we don't want anymore concessions made on dairy, David Wiens, the president of Dairy Farmers of Canada, said in an interview.

Every time things are loosened up, Canada's food sovereignty is weakened along with it, he said.