A deal to avoid 50 percent tariffs on Canadian goods is on President Trump's desk, with duties set to take effect at midnight unless he grants a reprieve.
President Donald Trump is weighing a deal that would spare Canada from a new round of 50 percent tariffs, with a decision due before duties take effect at midnight. An agreement to stave off the levies is now on his desk after days of wall-to-wall negotiations between U.S. and Canadian officials, according to three people familiar with the talks.
The stakes are enormous. Without a reprieve, 50 percent duties kick in at 12:01 a.m. Wednesday on roughly $20 billion worth of Canadian goods -- everything from hockey sticks and wine to cement and honey. The White House has spent weeks pressing Ottawa to drop its retaliatory trade measures, and the pressure is finally producing results.
Trump triggered the frantic round of negotiations last month when he invoked Section 338 of the Tariff Act of 1930 -- the first-ever use of the Depression-era law -- to hit a wide swath of Canadian products unless Canada removed its tariffs on U.S. automobiles, eliminated provincial bans on American liquor, and reformed its dairy supply management rules.
His proclamation included a 30-day window before the duties take effect to allow for more talks. That window closes at midnight.
The emerging package now before the president reportedly includes Canadian concessions on dairy quotas, the removal of retaliatory tariffs on U.S. vehicles, and a path toward restoring American wine and spirits to Canadian store shelves. In exchange, Washington would hold off on the new duties as both countries work toward a broader agreement covering nearly $1 trillion in annual trade.
The administration has shown little appetite for backing down. U.S. Trade Representative Jamieson Greer has made clear that retaliation will not be tolerated.
"If a country retaliates against us, we're obviously not going to tolerate that," Greer said. "We'll take action."
U.S. negotiators are pushing Canada to eliminate remaining retaliatory tariffs on American automobiles, reopen provincial markets to U.S. alcohol, and loosen its tariff-rate quota on dairy -- a recurring sore spot in Trump's long-running criticism of Canadian trade policy. Canadian officials, for their part, are seeking relief from existing U.S. duties on steel, aluminum, autos, and softwood lumber, which Ottawa says unfairly punish Canadian industry.
Canadian Prime Minister Mark Carney has called the talks "very intense and delicate" and has kept negotiators stationed in Washington through the weekend. He spoke with Trump by phone Monday afternoon, with more calls expected as the clock winds down.
Canada-U.S. Trade Minister Dominic LeBlanc described the situation as a "holding pattern" after meeting with Greer and Commerce Secretary Howard Lutnick, while chief negotiator Janice Charette has remained in the capital for days. "Our work is not finished," LeBlanc said.
Reports out of Washington suggest the odds of a deal by Tuesday were roughly even or lower as of late afternoon, with officials privately signaling that the final decision rests with the president alone.
If no deal is reached, the Section 338 duties will hit about 5 percent of Canadian exports to the United States -- the latest chapter in Trump's campaign to force fair treatment for American producers in the motor vehicle, alcohol, and dairy industries. The Supreme Court struck down much of the administration's earlier global tariff framework this year, but Section 338 carries no investigation requirement and no time limit, making it a durable tool for enforcing reciprocal trade.
Business leaders on both sides of the border are watching closely, warning that the uncertainty alone has already chilled sales of affected goods. Roughly 85 percent of U.S.-Canada trade remains duty-free under the USMCA agreement Trump negotiated in his first term.
The president has repeatedly shown he is willing to walk away from the table rather than accept a bad deal. Whether Canada's concessions are enough to earn a reprieve will be known within hours.
A deal to avoid 50 percent tariffs on Canadian goods is on President Trump's desk, with duties set to take effect at midnight unless he grants a reprieve.
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