U.S. and Canada race to finalize trade deal before tariffs hit

Traders Union
All News
Economic Data
U.S.-Canada deal nears deadline

Highlights

U.S. and Canada are close to a trade deal.
New 50% tariffs could take effect Saturday.
About $20 billion in Canadian imports are at risk.
Steel, aluminum, and lumber remain key issues.

The tariff would cover roughly $20 billion of Canadian imports, including products such as wine and hockey sticks, according to CNBC. President Donald Trump postponed its introduction by three days to give negotiators more time to complete an agreement. The delay followed an indication from Trump that the broad terms had been settled but still required final documentation.

Negotiators race against the deadline

Canadian Trade Minister Dominic LeBlanc remained in Washington as talks continued with U.S. Trade Representative Jamieson Greer and other administration officials. No final agreement had been announced by Friday, leaving businesses exposed to another abrupt shift in cross-border trade conditions.

Among the most sensitive issues are existing U.S. duties on Canadian steel, aluminum, and lumber. Trump has indicated that Washington could consider reducing some of those tariffs, while lower duties on Canadian automobiles have also emerged as a possible component of the negotiations.

Agriculture remains another source of friction. Washington has repeatedly challenged Canadian restrictions on access to its dairy market. Canada operates a supply-management system based on production quotas and tariff-rate quotas, while the USMCA expanded access for certain U.S. dairy and poultry products.

Energy could also enter the broader trade relationship. Trump has raised the possibility of reviving Keystone XL, the proposed pipeline designed to carry Canadian crude from Alberta to Nebraska before the project was canceled in 2021.

A test for North American trade stability

The immediate issue is whether Washington and Ottawa can remove the threat of another large tariff increase. The consequences extend beyond the approximately $20 billion of imports directly targeted by the planned duties.

Canada and the United States have deeply integrated manufacturing, energy, and agricultural supply chains. Higher tariffs can therefore affect businesses on both sides of the border through higher input costs, weaker sales, and disrupted sourcing decisions.

The uncertainty itself carries a cost. Previous surveys of importers have found that frequent tariff changes complicate planning and push companies to alter shipment volumes and sourcing strategies.

A final agreement would provide businesses with greater clarity and could reduce immediate trade tensions. Failure to close the remaining gaps, however, would put the 50% tariff into effect and reopen questions about how far the administration is prepared to use trade barriers in negotiations with one of the largest U.S. trading partners.

We have previously highlighted that Trump expands tariffs across 60 economies.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.