Canadian and U.S. trade officials concluded their sixth meeting in three weeks on Monday without securing a deal to avert new U.S. tariffs set to take effect Wednesday, according to multiple sources. The tariffs, authorized under Section 338 of the Tariff Act of 1930, would impose 50% duties on approximately $20 billion in Canadian exports, including plywood, hockey sticks, clothing, wines, cement, and dairy products. The White House has cited Canada’s discriminatory treatment of American products, including provincial boycotts of U.S. alcohol and retaliatory tariffs on U.S. vehicles and dairy, as justification for the measures.
Canadian officials race to finalize deal as deadline nears
Canada’s Trade Minister Dominic LeBlanc met with U.S. Trade Representative Jamieson Greer and U.S. Commerce Secretary Howard Lutnick in Washington on Monday to present a draft agreement, but prospects for a resolution remained uncertain. Prime Minister Mark Carney stated he expects to speak with U.S. President Donald Trump before the deadline but provided no further details. LeBlanc’s office confirmed this was the sixth meeting in three weeks, with negotiators aiming to secure approval from both leaders before Wednesday’s implementation.
The tariffs exclude energy products, potash, fish, and critical minerals. In 2024, Canada ranked as the third-largest source of U.S. imports, with over $380 billion in goods crossing the border. The White House has framed the measures as necessary to “level the playing field” for American exports, including cars, alcohol, and dairy, under Section 338—a law never previously invoked by a U.S. president. Legal challenges are expected if the tariffs are imposed.
Industry and provincial impacts
The 50% tariff would directly affect 20% of sales at Richmond Plywood in British Columbia, where executives stated the margin is “not absorbable” and U.S. customers are unlikely to accept the cost increase. Bhavjit Thandi, CFO of Richmond Plywood, noted that the company cannot pass the full cost to buyers, risking lost market share. Economists estimate British Columbia would bear 13% of the export hit, higher than Ontario or Quebec.
The U.S. has also targeted Canadian automotive exports, with negotiators discussing a potential reduction in the 25% Section 232 tariff on vehicles to 15%, contingent on deductions for North American content. A sticking point remains over whether only U.S.-specific content or broader North American content (including Canadian and Mexican parts) can be deducted. Industry officials argue a broader deduction could push effective tariff rates to single digits, below rates paid by competitors like Japan, South Korea, and the EU.
Public and political responses
A poll by Abacus Data found that less than 20% of Canadians support offering concessions to the U.S., such as ending alcohol bans or easing dairy restrictions, to avoid the tariffs. The survey indicated 36% favored counter-tariffs, while 30% preferred negotiation without concessions. Only 10% believed Trump would reverse course before Wednesday, with 40% assigning a 50/50 chance of the tariffs taking effect.
Background: Escalation of trade tensions
The new tariffs follow a year-long trade dispute that began in early 2025, when several Canadian provinces removed U.S. alcohol from store shelves in response to prior U.S. trade actions. The U.S. has also cited Canada’s retaliatory tariffs on U.S. vehicles and dairy under the supply management system as grounds for the measures. The negotiations are separate from ongoing talks to renew the U.S.-Mexico-Canada Agreement (CUSMA), though the U.S. is currently only negotiating with Mexico.
Consumer and economic implications
Economists warn that the tariffs could be passed down to consumers, exacerbating inflation pressures. The Yale Budget Lab estimates existing tariffs cost the average American household $1,100 annually, with consumer prices rising 3.4% over the past year. The new duties could further strain supply chains and increase costs for U.S. manufacturers reliant on Canadian inputs.
Legal and long-term uncertainties
The invocation of Section 338 marks an unprecedented use of the 1930 Tariff Act, raising questions about its legal durability. Trade analysts suggest the measures could face immediate legal challenges, potentially delaying implementation or prompting judicial review. The uncertainty has left businesses on both sides of the border preparing for disruptions, with no clear timeline for resolution.