Dominic LeBlanc defended the government’s decision to drop some retaliatory measures, saying it was under the impression that other allies like the EU and Japan were going to follow suit.Spencer Colby/The Canadian Press
Canada-U.S. Trade Minister Dominic LeBlanc plans to meet with U.S. Commerce Secretary Howard Lutnick in Washington this week, just days after Ottawa announced it will remove some retaliatory tariffs on the United States.
The meeting is happening as talks between the two countries seemingly enter a new phase, after an Aug. 1 negotiation deadline imposed by U.S. President Donald Trump did not result in a trade deal.
“I’m back in Washington tonight,” Mr. LeBlanc said in a French-language interview with Radio-Canada on Monday morning.
“I will meet with Secretary Lutnick. There are discussions happening at all levels. We’re trying to get, I hope, a deal that will put us in a better situation than we’re in right now.”
A spokesperson for Mr. LeBlanc confirmed the trip to The Globe and Mail, and said the minister will meet with Mr. Lutnick in the coming days.
As the Aug. 1 deadline passed, the Trump administration ratcheted up tariffs from 25 per cent to 35 per cent on a small portion of Canadian exports that don’t comply with rules of origin in the continental trade pact, the United States-Mexico-Canada Agreement. In the weeks that followed, the Prime Minister’s Office said little publicly about the negotiations.
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But things changed on Thursday, when Prime Minister Mark Carney spoke with Mr. Trump for the first time since June. A day after their phone call, Mr. Carney announced that some of Canada’s countertariffs would be dropped.
Mr. Carney said Friday that starting Sept. 1, the federal government will eliminate countertariffs on U.S. goods that comply with the USMCA, matching a key exemption granted by the U.S. The move was a bid to revive trade talks and secure sectoral tariff relief.
Countermeasures on steel, aluminum and the auto sector will remain in place, given the U.S. is targeting those industries with steep duties.
The Carney government appears to have shifted its focus from securing a broad trade deal to seeking relief for the aluminum, steel and auto sectors, which have been hammered by steep U.S. tariffs. It’s also casting an eye toward preserving the USMCA, which has so far proved crucial to limiting economic damage in the trade war.
Asked Friday whether Mr. Trump had told him the move to lift retaliatory tariffs would help kick-start trade negotiations, Mr. Carney said, “Yes.”
Mr. LeBlanc, in his interview with Radio-Canada, also defended the government’s decision to drop many of its retaliatory measures. When Ottawa decided in February to impose retaliatory tariffs on the U.S., it was under the impression that other allies were going to follow suit, he said.
“But we realized that not a single country other than China went in this direction,” he added.
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Canada imposed three rounds of countertariffs earlier this year covering nearly $100-billion worth of U.S. goods.
However, it soon started adjusting the measures, offering carve-outs for U.S. goods used in Canadian manufacturing, and exemptions for U.S. auto companies that continue making cars in Canada.
Both Mr. Carney and Mr. LeBlanc have also argued that the decision to mirror U.S. tariffs ensures that Canada continues to respect the USMCA.
The tariff exemption on goods compliant with the deal has blunted the impact of the U.S. trade war on Canadian businesses, allowing most goods to cross the southern border without additional levies.
Mr. Carney said Friday that the government will launch consultations on the USMCA as it gears up for its review, which is scheduled for next summer.
Prime Minister Mark Carney says on Sept. 1 Canada will drop some retaliatory tariffs on American products to match U.S. tariff exemptions for goods covered under the USMCA. Carney made the announcement at a news conference in Ottawa after meeting with his cabinet.
The Canadian Press
Ottawa’s pivot on Friday was welcomed by the aluminum and auto industries, although not by the steel industry, which has continued to advocate for robust retaliation.
“This gets us moving forward again after it appeared as though discussions had slowed or stalled,” Brian Kingston, chief executive officer of the Canadian Vehicle Manufacturers’ Association, which represents Ford, General Motors and Stellantis in Canada, said in an interview.
The auto industry is still pushing for the complete removal of tariffs on Canadian-made vehicles, which stand at 25 per cent, with a carve-out for U.S. auto parts that lowers the effective tariff rate to around 10 per cent to 15 per cent, depending on the model.
It’s a tough argument to make to a president who has repeatedly said the United States should not import cars from Canada.
However, poor financial results from the Detroit automakers, which have had to absorb the tariff costs, could put pressure on the White House to make concessions, Mr. Kingston said. And there’s a growing recognition, he added, that tariffs within North America’s integrated auto sector make U.S. car companies uncompetitive, particularly since Washington lowered auto tariffs on Japan and the European Union to 15 per cent last month.
“The automotive industry has taken on approximately US$12-billion in tariff costs, and those costs are mounting,” Mr. Kingston said. “I think there is an understanding that a problem has been created here. It needs to be rectified and it needs to be done quickly.”
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Aluminum industry representatives are likewise hoping that U.S. business needs will eventually push the White House to cut a deal with Canada.
The aluminum sector, which has been hit with 50-per-cent duties, is widely viewed as having the strongest argument for tariff relief. Unlike steel, the U.S. imports most of its aluminum, which is a crucial input in goods ranging from Boeing jets to Ford F-150 trucks. Canada is by far the largest supplier.
“We don’t have enough smelters in the United States today, and we are, and will continue to be, a metal-taking country for some time to come, even if we start building American smelters today,” Charles Johnson, CEO of the U.S. Aluminum Association, said in an interview. “If we don’t get it from Canada, we’ll have to get it from somewhere.”
He said discussions between Ottawa and Washington around the aluminum sector had largely ground to a halt in recent weeks, and welcomed Mr. Carney’s move to restart the talks.
Recent deals the U.S. has made with Europe, Britain, Japan and South Korea suggest the White House is open to lowering, but not wholly removing, sectoral tariffs on metals and automobiles.
Several of the agreements have also included tariff-rate quotas – allowing countries to export a certain quota of vehicles or metal to the U.S. at a lower tariff rate, while maintaining punishing tariffs above that level.
Quotas are controversial, because they effectively cap how much an exporter can grow and weigh on new investment. But if the tariff-rate quota is set high enough, as happened in 2018 when Canada agreed to a quota with the U.S. of 2.6 million vehicles, they’re relatively benign.
“All options need to be looked at to secure again the zero-per-cent tariff,” David Adams, CEO of Global Automakers of Canada, which represents non-U.S. carmakers, said of quotas in an interview.
“It’s sort of an eloquent way of potentially giving the President a win,” he said. ”He can say that he sort of beat us into submission and that there’s no unlimited exports into the U.S."