The Canadian minister responsible for Canada-U.S. relations, Dominic LeBlanc, and Canada's chief trade negotiator to the United States, Janice Charette, speak to the media at the Embassy of Canada in Washington, D.C.Anna Rose Layden/Reuters
Canada and the U.S. have discussed critical minerals and defence in their continuing trade talks, and progress on those areas is expected to influence a trade deal the two sides are aiming to close next week, according to three Canadian and one U.S. source with knowledge of the negotiations.
The plan is still to conclude a “phase one” deal in which Canada would receive reductions in President Donald Trump’s tariffs in exchange for conceding on a list of U.S. trade demands, before later dealing in detail with critical minerals and defence.
But Canada’s willingness to work with the U.S. on those areas, and potentially offer tacit agreement on some of its demands, could influence the contours of the first-phase deal, the sources said. Ottawa is hoping to conclude the agreement before Mr. Trump’s latest threatened round of tariffs begins on Aug. 19, in the hopes of preventing their imposition.
Already beset by tariffs, Quebec braces for another big trade hit
The U.S. is demanding a right of first refusal on Canadian critical minerals, that Canada complete its purchase of U.S. F-35 fighter jets, that Ottawa buy U.S. tech such as radar planes as part of joining Mr. Trump’s planned Golden Dome missile defence system, and that Washington receive some guarantee on future supplies of oil and gas, one Canadian and one U.S. source said.
The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the closed-door talks.
Dominic LeBlanc, the minister responsible for Canada-U.S. trade, and Janice Charette, Canada’s chief trade negotiator, remained in Washington on Friday. They briefed provincial and territorial trade ministers and the federal government’s Canada-U.S. relations advisory committee in the afternoon, Mr. LeBlanc’s office said.
The pair were scheduled to stay in Washington over the weekend, Mr. LeBlanc’s office said.
Two Canadian sources with knowledge of the talks said that provinces had been asked by the federal government to be prepared to quickly drop their bans on U.S. alcohol and retaliatory procurement rules if a deal is struck.
One of the sources said that this request was not new and had been made a while ago. This source said that a deal had not yet been reached as of Friday afternoon, but that work would continue.
The Globe is not identifying the sources because they were not authorized to speak publicly about internal deliberations.
U.S. Trade Representative Jamieson Greer, who met with Mr. LeBlanc and Ms. Charette for 90 minutes at his office near the White House on Thursday, spent the day at the Iowa State Fair.
Speaking with reporters there, he said he’d had “very detailed discussions” with his Canadian counterparts.
“We’re having what I call constructive negotiations with the Canadians. At the end of the day, President Trump, the United States, we’re going to do what is best for America,” he said, adding that “for decades, we’ve had major trade issues with Canada.”
One of the Canadian sources said the Thursday meeting went well and there was optimism for a deal. The source said that it did not appear, however, that Mr. Trump was being apprised of every development at the negotiating table, which left the possibility that he would scupper an agreement or make additional demands.
Section 338 of the Tariff Act gives Trump an easy – but untested – way to impose new levies
The deal under discussion would see Mr. Trump lower – but not fully get rid of – his tariffs on Canadian steel, aluminum, autos and forest products, as well as refrain from hitting more products with tariffs on Aug. 19.
In exchange, Canada would eliminate its retaliatory tariffs on U.S. autos, agree to Washington’s interpretation of how dairy quotas should be allocated, and have provincial governments stop their Buy Canadian programs and boycotts of American alcohol, among other things.
U.S. demands for “phase two” of the talks have loomed over the negotiations, the sources said.
The U.S. source said one possibility is Canada making a quiet, informal pledge to complete the F-35 purchase with the formal announcement held back until a second-phase deal. One Canadian source said Ottawa might bargain its willingness to fulfill U.S. demands on critical minerals in a future deal for lower tariff numbers in this agreement.
Another Canadian source said Ottawa’s officials had discussed making a pitch on critical minerals and defence as part of a closing offer to get the deal over the finish line.
Prime Minister Mark Carney last year promised to seek a grand bargain with Mr. Trump covering trade, defence and border security. His original hope was to entirely get rid of U.S. tariffs imposed under Section 232 of the Trade Expansion Act.
But Mr. Trump walked away from talks last October over an Ontario government antitariff ad. Negotiations resumed in the spring but made little headway.
Only last month, when Mr. Trump announced 50-per-cent tariffs on US$20-billion worth of Canadian electronics, dairy, alcohol and other products, using Section 338 of the Smoot-Hawley Act, did talks begin in earnest.
Mr. LeBlanc and Ms. Charette have met with Mr. Greer four times in the past three weeks and have teams of negotiators and experts staying in Washington as long as talks continue.
Mr. Carney has already made concessions to Mr. Trump away from the bargaining table without receiving anything in return, ramping up the pressure to land a deal that would lessen the economic pain the U.S. is inflicting on Canada. The Prime Minister cancelled a planned digital service tax, rolled back a requirement for streaming companies to fund Canadian content creators and agreed to share toll revenue from the Gordie Howe International Bridge, even though Canada paid the entire cost of building it, all at Mr. Trump’s behest.
Another complication is that Ottawa will need provincial co-operation to make a deal happen, as ending the alcohol boycotts is one of the key demands.
“We need a deal that takes into account our steel industry, our manufacturers, our auto sector, our lumber and derivate products. So we need to see a good deal, a fair deal, a hard-driven negotiated deal,” Ontario Finance Minister Peter Bethlenfalvy told reporters at Queen’s Park on Friday.
“I will say this: that alcohol remains a tool that we have in response to these tariffs, and we’re resolute in our belief that they should remain off the shelves until and unless we reach that type of deal that I just described.”