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Canada is continuing to negotiate a trade deal with the United States that will allow it to both avoid U.S. President Donald Trump’s crippling tariff threat — set to come into effect on Wednesday — and get some additional relief on existing tariffs in key sectors.
But after a flurry of meetings between top Canadian and American negotiators over the last three weeks, the two countries remain at an impasse heading into the home stretch.
Sources have told CBC News that Canadian negotiators fear there may be no way to avert Trump’s 50 per cent tariffs on hundreds of Canadian goods, as Washington digs in on its demands while Ottawa tries to persuade provinces to lift restrictions on American alcohol.
The U.S. claims it’s imposing the tariffs because of Canadian discrimination toward its automobile, dairy and alcohol sectors.
With two days left to negotiate, here’s what sources have told CBC News about where Canada-U.S. trade talks stand on Monday morning, broken down by each key sector.
Canadian negotiators fear there may be no way to avert new U.S. tariffs from taking effect Wednesday, as Ottawa struggles to win relief from Washington on existing sectoral tariffs while also trying to persuade provinces to lift restrictions on American alcohol.
Automobiles
According to sources, the U.S. is proposing to reduce its existing auto tariffs from the current 25 per cent down to 12.5 per cent, an offer the Canadian side believes is not good enough.
The U.S. has cited issues with Canada’s auto trade as one reason why it intends to impose its 50 per cent tariffs. The White House argues Canada imposes tariffs and quotas on vehicles imported to Canada from the U.S. — but not other countries.
Lana Payne, national president of Unifor and a member of Prime Minister Mark Carney’s advisory committee on Canada-U.S. economic relations, said on Friday that Trump is missing the fact that his auto tariffs hurt U.S. companies.
“We can’t afford to give any more concessions here, and we need a good deal. And that means we’ve got to grind it out until the very end,” Payne said.
Payne has previously warned that agreeing to the levies in writing now could give Washington a path to seeking permanent auto tariffs as part of a renegotiated Canada-United States-Mexico Agreement (CUSMA).
Sources say, however, that Canada will need to concede some ground in any sort of deal.
Dairy
Trump has long lambasted Canada’s supply management system, which allows a certain amount of U.S. dairy to enter Canada tariff-free before steep duties are applied.
In announcing its 50 per cent tariff threat, the White House said Canada established tariff-rate quotas on cheese from the U.S. that are “much more restrictive” than the quotas applied on similar imports of cheese from the European Union.
On Friday, U.S. Trade Representative Jamieson Greer reiterated that argument and said that “we have an uneven dairy treatment.”
Sources have told CBC News that Canada will need to concede on dairy in any new deal. It’s unclear what Canada has offered on the matter.
But concessions on this front could be politically dangerous for the Carney government.
Quebec Premier Christine Fréchette said on Friday that supply management is a red line for her province and that several thousand farms and jobs depend on Canada’s dairy industry.
Alcohol
The federal government has told provinces to be ready as soon as possible to put U.S. alcohol back on store shelves in case a tariff deal is reached, sources have told CBC News. That irritant is another reason behind Trump’s 50 per cent tariff threat.
Only Alberta and Saskatchewan, which have privatized alcohol retail systems, have resumed the sale of U.S. booze. Other provinces have maintained their bans, although there has been division among them for months over whether to relent.
Sources have told CBC News that Canadian negotiators fear this is a significant obstacle in avoiding Trump’s tariff threat. The bans are entirely provincially controlled, but some provinces have said they’ll only relent if they get relief for their sectors.
On Thursday, Ontario Premier Doug Ford said he will end the province’s boycott only if negotiators secure what he describes as a “fair deal” that addresses tariffs on key sectors.
“If we get a fair deal that will protect our steel sector, our auto sector, our forestry sector, agriculture sector, manufacturing sector, then we’d be more than happy to bring booze back on the shelves,” Ford said.
Similarly, Fréchette has said she’s open to allowing U.S. wine to return to store shelves, but she’ll need to see reductions in tariffs on key sectors like aluminum and manufacturing.
Sources have also said the federal government has asked provinces and territories to be prepared to drop retaliatory procurement rules that favour Canadian suppliers in case a deal is made.
Steel and aluminum
Canada is pushing to have the Trump administration lower its existing tariffs on steel, aluminum and copper — which range from 10 to 50 per cent.
The Carney government has announced various measures over the last few months to prop up the sectors, including establishing a $1-billion loan program through the Business Development Bank of Canada (BDC) so companies most affected by tariffs can get the money they need to stay in business.
Last week, the federal government announced it would pump an additional $100 million into Canada’s steel industry with a new program that will pay for half the costs of transporting Canadian-made steel by ship or rail within the country.
The program is slated to operate for one year, or until the $100-million funding envelope runs dry, with a single producer eligible for a maximum rebate of $50 million.
When asked what will happen to the program if it runs out of money before the end of its one-year timeline, Transport Minister Steven MacKinnon hinted that an extension may be considered.
Softwood lumber
According to sources, Canada is pushing for relief on tariffs the U.S. has slapped on Canadian softwood lumber, but Washington is not interested in discussions on this front. The existing total tariff rate is 45 per cent.
The Canada-U.S. fight over softwood lumber predates the Trump administration by decades and was also a point of concern when former U.S. president Joe Biden was in office.
Sources say the Trump administration’s view is that the softwood issue should be negotiated separately from the other sectoral tariffs.
Trump’s looming 50 per cent tariffs are planned to hit items like charcoal, plywood, wooden doors, wooden fixtures and various lumber products. It’s expected to be especially challenging for British Columbia.
Ashlee Cribb, CEO of Gorman Bros. Lumber Ltd. in West Kelowna, told CBC’s The House last week lumber tariffs need to be resolved quickly and that it will be difficult for the company to respond to the additional tariffs.
On Friday, B.C. Premier David Eby said U.S. lumber tariffs need to be addressed and that Ottawa is “well aware” they are one of B.C.’s biggest concerns.
Critical minerals, energy and security
The Americans are seeking a deal that would see preferential access to Canadian critical minerals and cover security and energy.
Canada has several projects located across the country that mine and develop many critical minerals the U.S. desires, such as lithium, nickel, cobalt and copper. Ottawa is also working to advance production through its national strategy, released in 2022.
Earlier this month, Trump announced the U.S. government will invest $3 billion in critical minerals and battery projects to increase domestic production and boost national security and industry policy.
The White House needs critical minerals to replenish weapons stockpiles depleted during its ongoing war with Iran and reduce U.S. dependence on Chinese supply chains.
There’s also the question of Canada reviewing its F-35 fighter jet purchase from the United States. Carney launched the review in March 2025 in response to diplomatic and trade tensions with the Trump administration.
Last week, National Defence Minister David McGuinty acknowledged the F-35s are “being examined by our negotiating team.”
“The question of what is part and parcel of that negotiation continues. And I am hopeful we will come to a successful outcome in due course,” he said.
