Canada-U.S. Trade Minister Dominic LeBlanc, left, listens as Prime Minister Mark Carney meets with Canada's premiers in Charlottetown on July 23.Darren Calabrese/The Canadian Press
Canada-U.S. Trade Minister Dominic LeBlanc is back in Washington this week as Ottawa seeks to avoid the imposition of punishing new tariffs on Aug. 19 and move broader trade discussions forward.
Mr. LeBlanc flew to the U.S. capital on Monday along with Canada’s chief trade negotiator to the United States, Janice Charette, for meetings on Tuesday and Wednesday, his spokesperson Gabriel Brunet told The Globe and Mail.
On Tuesday Mr. LeBlanc attended late Senator Lindsey Graham’s funeral alongside Canada’s ambassador to the United States, Mark Wiseman, Mr. Brunet said.
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Mr. LeBlanc and Mr. Wiseman later attended a “Canada-U.S. Friendship Day” event at Nationals Park where Washington’s baseball team was teeing off against the Blue Jays, the officials said. The event was sponsored by the federal government and tech giants Google, Amazon and Netflix.
The Minister’s itinerary was tightly guarded by his office, which initially refused to confirm any elements, including his attendance at public events. The office only changed course after The Globe had confirmed some details of Mr. LeBlanc’s and the Ambassador’s itinerary with other sources.
Last week, Prime Minister Mark Carney said the two governments had agreed to intensify talks after U.S. President Donald Trump said that his administration would impose additional 50-per-cent tariffs on around US$20-billion worth of Canadian exports.
The tariffs would hit around 5 per cent of Canadian exports to the U.S., with the affected industries concentrated in Ontario, Quebec and British Columbia. Unlike some of the other U.S. tariffs, there is no carve-out for products that comply with the rules of the United States-Mexico-Canada Agreement.
The Section 338 tariffs are explicitly aimed at getting Canada to back down on several retaliatory measures taken over the past year in response to earlier U.S. tariffs, including provincial bans on U.S. alcohol sales and Ottawa’s retaliatory tariffs on American vehicles. The trade action also takes aim at how Canada allocates dairy quotas – a long-standing U.S. concern.
With a 30-day lead time, the new tariff threat has been widely interpreted as an attempt by the Trump administration to increase U.S. leverage heading into deeper discussions about the future of continental trade. Washington decided not to extend the USMCA on July 1, pushing the trade deal into a period of annual reviews and extending the runway for negotiations.
Mr. LeBlanc and Ms. Charette have travelled to Washington several times in recent months to try to advance trade discussions, but negotiations have foundered on a central disagreement: The U.S. wants Canada to make a series of concessions before getting to the bargaining table, while Ottawa has been unwilling to give up leverage prematurely – with a few notable exceptions, such as the decision to scrap the digital services tax.
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Mexico City has been more willing to offer concessions and has held three rounds of formal bilateral discussions with Washington about potential changes to the USMCA, with a fourth round planned for September.
With its trip to Washington this week, the Canadian delegation is trying to break the logjam with the Trump administration. But just how sensitive the negotiations are is underscored by how secretive the federal government has been about them.
Mr. LeBlanc’s office first declined to provide details about the trip, including that the minister was already in Washington. Or including that the minister had already arrived in Washington.
The Minister and the ambassador capped off their day at the ball game where Mr. Wiseman threw the opening pitch in a game delayed because of severe storms.
The Carney government has been more secretive in its handling of trade talks when compared with how then-prime minister Justin Trudeau’s government managed the file under the first Trump administration.
In the talks that began in 2017, Ottawa disclosed some of its red lines and made the press aware of who government officials were meeting among their American counterparts, and when. Media stakeouts of the closed-door talks were a regular occurrence.
Those public interventions, though, angered U.S. officials who thought Canada was negotiating in public.
At the end of meetings with Canada’s premiers last week, Mr. Carney said his government was aiming to strike a comprehensive agreement that addresses all of the tariffs that Mr. Trump has imposed or threatened, including those on autos, steel and aluminum.
Prime Minister Mark Carney, centre, and Canada's premiers hold a closing press conference at the First Ministers Meetings in Charlottetown.Darren Calabrese/The Canadian Press
He cautioned that he was not signalling whether his government is expecting to be successful in its bid for a deal before the Aug. 19 tariffs. However, Mr. Carney said there was a depth to the talks between him and the President as well as Mr. LeBlanc and Ms. Charette with their counterparts that “reflects the seriousness of the trade relationship and the breadth of the issues, so it creates an opportunity.”
Mr. Carney did not rule out Canadian retaliation against the U.S. if the Aug. 19 tariffs are imposed but declined to specify what options his government is considering.
Meanwhile, U.S. Trade Representative Jamieson Greer said last week that he was aiming to negotiate separate “interim arrangements” with Canada and Mexico by the end of the year, before addressing some of the core issues of the USMCA – such as rules of origin for automobiles and other industrial goods – in 2027.
In a Fox News interview on Tuesday, Mr. Trump said that he wasn’t looking to update the USMCA. “I don’t care. I mean I don’t really want to, I’d rather have, I’d rather be independent,” he said, adding that Mexico and Canada need the agreement more than the U.S. does.
Patrick Childress, a partner with the U.S. law firm Holland & Knight and a former U.S. trade official, said it’s possible the latest tariff threat leads to a positive result with a negotiated settlement, but the opposite is also possible.
“The worst-case scenario would be that this latest action by the U.S. government creates even more political and popular pushback in Canada, generating more pressure on Canadian politicians not to engage constructively with the U.S. government, and then the trading relationship continues to deteriorate,” Mr. Childress said.
Provincial premiers, who met with Mr. Carney in Charlottetown last week, have said they are united behind the federal government though they differ in their willingness to contemplate retaliation.
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The Section 338 tariff threat has sent another shockwave through the Canadian business community, targeting a range of industries that had previously been exempt. Targeted sectors include chemicals, electronic equipment, paper products, furniture and alcohol.
Marc Gilbert, a senior partner with Boston Consulting Group and head of BCG’s Center for Geopolitics, said that the macroeconomic impact of the tariffs would be relatively small. But certain industries, companies and regions would be hit hard.
If you’re a plastic bottle manufacturer, for example, “it’s harsh, it is a major change,” he said.
Since Mr. Trump announced the tariffs last week, companies have been reactivating their tariff command centres, assessing their exposure and looking for ways to mitigate the impact by adjusting supply chains, moving inventory across the border or shifting production to the U.S., Mr. Gilbert said.
“You have to assume the worst, and act as if it’s the worst, and then continue to position for a better outcome,” he said.