US, Canada Negotiate to Block 50% Tariffs on $20 Billion Goods

Trade between the United States and Canada faces immediate disruption if new tariffs take effect at 12:01 a.m. Wednesday. The proposed 50 percent duties would cover roughly $20 billion in Canadian exports, including items such as hockey sticks and tongue depressors, and would be paid by U.S. importers who may pass costs to consumers.

The central tension is whether last-minute talks can produce concessions that satisfy both governments before the deadline. Canadian Prime Minister Mark Carney described the discussions as intense and delicate and declined to provide details. U.S. Trade Representative Jamieson Greer said the administration would not tolerate retaliation and noted that Canada appeared open to a more conciliatory path.

Negotiators are addressing several U.S. demands. These include increased Canadian purchases of American military equipment such as F-35 fighters, participation in a proposed missile-defense system, and expanded access to critical minerals to reduce reliance on supplies from China. Canada seeks relief from existing U.S. tariffs on steel, aluminum, and softwood lumber, which Washington has long argued receive unfair subsidies.

The legal basis for the new tariffs is Section 338 of the Tariff Act of 1930. This provision allows the president to impose duties of up to 50 percent on imports from countries found to discriminate against U.S. businesses, without requiring a prior investigation. President Trump cited discrimination in autos, alcohol, and cheese. The same statute has not been used in nearly a century.

The current round follows earlier tariff actions. Last year the administration imposed broad duties justified by the trade deficit; the Supreme Court later struck those measures down. In July the administration applied 10 to 12.5 percent tariffs on dozens of countries, including Canada, for alleged failures to restrict forced-labor imports. Canada responded with retaliatory measures, as did China.

Public reaction in Canada has been sharp. A petition calling for the expulsion of U.S. Ambassador Pete Hoekstra has gathered nearly 218,000 signatures. Canadian officials have warned that any deal must avoid the appearance of one-sided concessions to prevent domestic backlash.

Nearly 72 percent of Canadian goods exports last year went to the United States, while daily cross-border trade exceeds $2 billion. Both governments have indicated they prefer to avoid the new tariffs, according to Ryan Majerus, a former U.S. trade official now at King & Spalding. The U.S. midterm elections in November add pressure to limit further increases in consumer prices.