A worker cuts a piece of steel for a customer at North York Iron, a steel supplier in Toronto, in February. Sources said Canada and the United States are talking about working together to counter China’s unfair trade practices, a topic that could affect U.S. tariffs on Canadian steel and aluminum.COLE BURSTON/AFP/Getty Images
Canada and the United States are exchanging potential terms of agreement in closely held talks on an economic and security deal, two sources say, but these do not represent the draft text of an actual pact.
These exchanges are an effort to spell out what both sides might be able to agree upon as Ottawa and Washington try to find enough common ground to end their damaging trade war, the two sources said.
The Globe and Mail is not naming the sources because they were not authorized to speak publicly.
It’s also far from clear whether a deal will be landed anytime soon, as the United States is negotiating with close to 20 other countries that are seeking relief from tariffs U.S. President Donald Trump has imposed on their products. Mr. Trump announced Wednesday a deal with China that restores an agreement the two countries brokered in May before they escalated punitive measures in their trade war.
One of the sources compared the documents being exchanged to term sheets in the corporate sector, which outline the ingredients of a possible deal and serve as the basis for negotiations.
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The talks on a new economic and security agreement between Canada and the United States are aimed at resetting a relationship that has been strained by U.S. tariffs and threats of annexation. Prime Minister Mark Carney’s Liberals won April’s election after he campaigned on being the best person to negotiate with the President.
These talks could amount to a first phase, with the second phase being the renegotiation of the trilateral United States-Mexico-Canada Agreement already scheduled for 2026.
The economic-defence talks are being conducted among a very small circle of officials, including Dominic LeBlanc, the minister responsible for Canada-U.S. trade, Canada’s ambassador to the United States Kirsten Hillman, U.S. Commerce Secretary Howard Lutnick and Jamieson Greer, the United States Trade Representative. It’s possible this deal may be an executive-handshake agreement like the one the British government signed with the White House in May.
The sources said Canada and the United States are talking about working together to counter China’s unfair trade practices, a topic that could affect U.S. tariffs on Canadian steel and aluminum, and further border security arrangements to stop the illegal distribution of the opioid fentanyl. The United States also wants Canada to take a greater role in securing the Arctic and join Mr. Trump’s ambitious Golden Dome missile shield project – a project Mr. Carney has publicly said would make sense for Canada.
They said each side is putting ideas on paper and sharing them as part of the talks.
Speaking to an Ottawa audience on Wednesday, Pete Hoekstra, the U.S. ambassador to Canada, said Mr. Carney and Mr. Trump “are two leaders in a hurry to get things done that they believe are absolutely critical.” He raised the possibility of a breakthrough in talks at the Group of Seven Leaders Summit next week in Alberta, saying he thinks the leaders see the event as an inflection point in the economic and security negotiations.
“If there is a framework for an agreement, what does this let us do? It lets us put behind us, you know, some of the stuff from the last few months, and really start talking about what’s important to the people of the United States, and whether it’s important to the people of Canada ‐ or not.”
Mr. Hoekstra also mused about locating joint Canada-U.S. military bases in the Canadian North in the future. “If we had bases, rather than in Montana and North Dakota and the Upper Peninsula of Michigan, it might really be advantageous to have those things way up north ‐ in Canada. That’s worth something to us.”
CBC News on Friday reported it had learned of the existence of a working document outlining details of a potential economic and security deal between Canada and the U.S. CBC, citing an unidentified source, said the working document states that Canada is willing to participate in the Golden Dome security program, and it also mentions Canadian commitments to build more infrastructure in the Arctic, Canada’s pledge to meet its NATO defence spending targets, as well as previously announced border security investments.
The current U.S. levies on Canada, which remain in effect, include 50-per-cent tariffs on Canadian steel and aluminum, as well as a 25-per-cent tariff on Canadian-made vehicles, which applies only to the non-U.S. content in those cars and light trucks. There is also a 25-per-cent tariff – which drops to 10 per cent on critical minerals, energy and potash – for goods that don’t comply with United States-Mexico-Canada Agreement rules of origin.
Canada in response has imposed retaliatory tariffs.
With a report from Associated Press