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Or sign-in if you have an account.Mark Carney and his team have optimistically seen next week’s deadline as an opportunity to finally get the comprehensive tariff-reduction deal with Trump. Photo by NICK PROCAYLO/POSTMEDIAA year ago, after a meeting with Canada’s provincial leaders, Prime Minister Mark Carney made a pledge that he has since repeated many times.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an Accountor“Canada will not accept a bad deal,” he said about trade negotiations with President Donald Trump’s administration.That promise is being put to the test as never before. Canadian trade officials have spent days camped out in Washington as they try to reach a pact to avert a punishing array of new tariffs threatened by the White House.Trump and his officials have demanded Carney act on a lengthy list of trade irritants or the United States will move forward on Aug. 19 with 50 per cent duties on about US$20 billion worth of Canadian products, including milk, plywood, hockey sticks and beer.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againThe two sides are in intensive talks over a preliminary deal to stave off the new taxes, according to people familiar with the matter, speaking on condition they not be identified as the negotiations continue.The framework of a potential deal would see the U.S. back away from the 50 per cent tariffs and reduce certain Section 232 tariffs on Canada. The 232 levies are the ones Trump has put on foreign-made steel, aluminum, autos and lumber — all industries with integrated supply chains between the U.S. and Canada.In exchange, Canada would remove some of its retaliatory measures and make other concessions, such as returning U.S. booze to store shelves and widening access to its dairy market, the people said.One item under discussion would be lowering the U.S. auto tariff, which is currently set for Canada and Mexico at 25 per cent of the value of the non-U.S. content, the people said. Trump’s previous deals with auto-exporting nations Japan and South Korea have cut the auto tariff to 15 per cent.Roughly half of the value of a typical Canadian-made vehicle is from U.S. components. So a 15 per cent headline rate may mean an effective 7.5 per cent tariff, depending on the model. To get such a deal, Canada would have to roll back its retaliatory tariffs on U.S.-manufactured cars and trucks.The U.S. and Canada are also discussing changing steel tariffs to exclude certain derivative products and potentially also lower the headline tariff rate, the people said.Canada has accepted that it can’t get all U.S. tariffs removed. But it wants the Section 232 tariffs set at 10 per cent or lower, and the U.S. is resisting that, one of the people said.The situation remains fluid, and may produce an initial deal that wouldn’t settle all trade irritants but would open the door to further discussion, the people said. But any pact would need Trump’s blessing. The president had not yet been briefed on the talks as of Tuesday, a White House official said. U.S. Trade Representative Jamieson Greer is leading U.S. efforts, with the involvement of others including Commerce Secretary Howard Lutnick.A U.S. official, speaking on condition of anonymity, said the Trump administration is willing to discuss trade but is committed to the president’s policy of using tariffs and other measures to reshore manufacturing and reduce the trade deficit. The official declined to detail the ongoing talks.It’s far from clear whether Trump is willing to give significant ground on the Section 232 levies — or whether, in the longer run, his administration will even consider renewing the Canada-U.S.-Mexico Agreement. That puts Carney in a bind: How far can he go in granting concessions if U.S. tariffs are staying in place permanently?“This is going to come down to the U.S. tariffs on steel, aluminum, and automobiles,” said Brian Clow, who played a major role for Canada in U.S. trade negotiations under Carney’s predecessor, Justin Trudeau.“The 232s have to get close to zero, especially for automobile trade where the margins are so low,” he said. “If the U.S. isn’t willing to significantly lower the 232 tariffs, the provinces won’t put alcohol back on shelves. If alcohol isn’t back on shelves, the U.S. won’t finalize a deal.”Carney, 61, and his team have optimistically seen next week’s deadline as an opportunity to finally get the comprehensive tariff-reduction deal with Trump they’ve been seeking for more than a year. But the prime minister has limited room to manoeuvre.The liquor bans, imposed by provincial governments after Trump’s initial round of tariffs in early 2025, have done major harm to U.S. exporters of wine, whiskey and other products. Canadian imports of American alcoholic beverages plunged 81 per cent in a year, according to the White House.Carney can try to persuade provincial leaders on booze, but he can’t order them to. And each province has its own grievances with the U.S.For Ontario, Canada’s manufacturing heartland, a deal would have to include tariff relief on steel and autos to win over Premier Doug Ford. The premier’s office didn’t respond to a request for comment.In British Columbia, with its massive forestry industry, Premier David Eby’s priority is getting duties lowered on softwood lumber — though it appears lumber won’t be part of an initial deal, some of the people said.Eby’s office declined to comment. Recently, he said “there is not a chance in hell” U.S. alcohol will go back on shelves in BC. “The idea of the president, that he can bully us into whatever he wishes, is incorrect.” Bottles of American-made rum removed from a shelf at the Liquor Control Board of Ontario (LCBO) Queen’s Quay store in Toronto, Ontario, Canada, on Tuesday, March 4, 2025And in Quebec, Premier Christine Fréchette will be looking for reduced tariffs on aluminum without giving away major concessions on dairy. A spokesperson for Fréchette said: “In the context of the ongoing trade war, the Premier continues to defend Quebec’s economic interests.”In other words, resolving the booze bans will necessitate a pact that’s palatable to policymakers across Canada of different political stripes. That’s yet another complication for Carney.“It underscores the difficulty of governing our country as a federation,” said Goldy Hyder, chief executive of the Business Council of Canada, which has been pushing Carney to get to a deal with Trump. “I think the prime minister has to carve out a place for doing what’s right for the country above all else.”A spokesperson for Dominic LeBlanc, Canada’s minister in charge of U.S. trade, declined to comment.Many business executives don’t want Carney to grant concessions too easily. A KPMG survey of hundreds of business leaders found about 70 per cent said the Canadian government should take a tough stance in negotiations, using any leverage it has available with the country’s most important trading relationship on the line.“If we are not tough, what’s the alternative? We’re going to concede and give everything that they’ve asked for without getting anything in return?” asked Joy Nott, a partner in KPMG’s trade and customs practice in Canada. “That would be seen as more negative.”In recent days, Canadian officials have warned Greer that they can’t accept a deal that forces concessions without getting any movement on Section 232 tariffs, according to people briefed on the negotiations. Such a move would be impossible given the Canadian public mood, they said.Polls show that, too. A recent Abacus Data poll found 69 per cent of residents in Ontario and 72 per cent in British Columbia want to keep the U.S. alcohol restrictions in place.Another recent survey from the Angus Reid Institute found that 62 per cent of Canadians want Carney to hit the U.S. with retaliatory tariffs if Trump carries out his latest tariff threat. Only 19 per cent want to take that option off the table and seven per cent want to offer up concessions.If Trump goes ahead with it, Carney “will have to do something,” said Eric Miller, founder of Rideau Potomac Strategy Group, a trade and economic consultancy. “The public is just angry. The public is kind of done.”—With assistance from Derek Decloet, Thomas Seal and Melissa Shin. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.