Canadian Prime Minister Mark Carney spoke with US President Donald Trump twice this week as Canada seeks a last-minute deal to prevent new 50% tariffs from taking effect at midnight on Wednesday.
“Prime Minister Carney and President Trump spoke again this afternoon about the ongoing negotiations,” Carney’s office said, without providing further details. Tuesday’s call followed another conversation between the two leaders on Monday afternoon.
“We are negotiating,” Carney told reporters on Monday. “The negotiations are very intense and delicate. This is not the time to talk about negotiations in public.”
The proposed US tariffs would affect around $20 billion worth of imports and apply regardless of whether Canadian goods qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA), which has shielded much of Canadian industry from earlier US tariffs.
The White House and the Office of the US Trade Representative did not immediately respond to requests for comment.
Auto tariffs remain a sticking point
The US and Canada have wrangled over trade for decades, with longstanding disputes involving Canadian softwood lumber and US access to Canada’s protected dairy market. Despite these tensions, the two countries have generally maintained close relations.
That relationship has become more strained during Trump’s second term, as the US president has made tariffs a central part of his economic agenda, including efforts to encourage manufacturing in the United States.
One of the key sticking points in the current negotiations is the existing US tariff on Canadian automobiles, Reuters reported, citing two sources.
The two sides have discussed reducing the US Section 232 tariff on Canadian vehicles from 25% to 15%, with further reductions linked to the amount of US content in each vehicle.
However, Washington and Ottawa remain divided over how that content should be calculated. The US wants only US-produced content to count, while Canada wants all North American content, including Canadian and Mexican components, to be included.
With automotive profit margins averaging around 6%, a 15% tariff would still be considered too high, a Canadian auto industry official told Reuters. The official noted that roughly half the value of every Canadian-built vehicle originates in the US, meaning tariffs could hurt businesses on both sides of the border.
Earlier on Tuesday, the US Commerce Department introduced new rules requiring automakers exporting from Canada and Mexico to certify the current level of US content in their vehicles for tariff deductions.
The new system reduces the certification requirement to once a year from twice a year. However, automakers must re-certify vehicles’ US content by September 30 to claim deductions under the new annual cycle beginning December 1.
Billions of dollars at stake
Trade experts and industry representatives have warned that the new tariffs could result in job losses and business closures in vulnerable sectors, including lumber, wine and dairy.
They also warned that the dispute could complicate broader negotiations over the USMCA, which the US declined to renew last month and which is now undergoing an annual review.
“There are billions in goods per year that were not impacted before, but now are at risk of being impacted significantly,” said Candace Laing, CEO of the Canadian Chamber of Commerce.
“Businesses have been doing a high-wire act for well over a year, holding off on hiring, investment and growing in Canada,” she added.
On Monday, Canadian officials held nearly two hours of talks with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.
Greer has repeatedly pointed to Canada’s retaliatory tariffs following the initial US measures, some provinces’ refusal to stock US liquor and Canada’s dairy supply-management system among Washington’s grievances.
With the tariff deadline approaching, the two governments remain under pressure to bridge their differences and prevent another escalation in trade relations.
