US and Canada race to resolve auto and dairy disputes before 50% tariff deadline

Negotiations ahead of the tariff deadline

Canadian negotiators Janice Charette and Dominic LeBlanc remained in Washington to conduct daily talks with United States Trade Representative Jamieson Greer and Deputy Trade Representative Jeff Goettman. On Friday, LeBlanc informed an advisory committee that both sides remained far from a draft agreement, though discussions continued through a virtual meeting on Sunday. The talks focus on averting 50% tariffs scheduled to take effect on Wednesday on roughly $20 billion in Canadian goods. United States President Donald Trump invoked Section 338 of the Tariff Act of 1930 to authorise the duties, following a United States Supreme Court decision earlier in 2026 that invalidated emergency tariff powers. Canadian Prime Minister Mark Carney said in St John's, Newfoundland and Labrador, that he would speak directly with Trump before the deadline.

We are negotiating, negotiations are very intense and delicate.

Vehicle tariff formulas and regional content disputes

Automotive import duties represent a central point of contention between the two delegations. United States negotiators offered to reduce the 25% Section 232 tariff on Canadian vehicles to 15% after value content deductions, while Canada pushed for a 10% rate or expanded exemptions. A primary disagreement centers on deduction calculations: Washington insists on deducting only United States-specific content, whereas Ottawa wants all North American content included, encompassing parts made in Canada and Mexico. Auto industry representatives stated that regional deductions could lower effective tariffs to single digits. Currently, vehicle imports from Japan, South Korea, and the European Union enter the United States at a 15% tariff without regional parts constraints, while most British vehicles face a 10% tariff.

Agricultural quotas and provincial alcohol bans

The Trump administration presented several longstanding demands concerning non-tariff barriers and trade practices. Jamieson Greer indicated that any agreement must address Canada's supply management system for dairy, poultry, and eggs, where over-quota tariffs exceed 200%. Washington also challenged Buy Canadian procurement rules in Ontario, Quebec, and British Columbia that prioritize domestic steel, aluminium, and wood for public contracts. In addition, United States negotiators called for the removal of provincial bans on American wine, beer, and spirits, which Canadian provinces enacted in 2025. Ontario Premier Doug Ford stated that American liquor will not return to store shelves without a trade agreement or the removal of tariffs.

Any potential resolution has to include all of these, or a pathway forward for them.

Industry exposure and trade pact uncertainty

The scheduled 50% tariffs cover products including wine, furniture, dairy, cement, clothing, fishing rods, and hockey equipment. The targeted goods represent 5.2% of the $383 billion in products the United States imported from Canada in 2025. Unlike previous trade measures, the Section 338 tariffs would apply even to goods eligible for preferential status under the United States-Mexico-Canada Agreement. Dan Kelly, president of the Canadian Federation of Independent Business, noted that 85% of Canadian exports had avoided tariffs until now. Sectors under pressure include Canadian wood products and winemakers in the west, who are already dealing with wildfires. The negotiations occur after Trump declined in July 2026 to extend the USMCA for 16 years, leaving the agreement subject to annual reviews.

Our job is not yet done.