Minister of Intergovernmental Affairs of Canada Dominic LeBlanc during the First Minister’s Meeting in Saskatoon, June 2. He met with U.S. Commerce Secretary Howard Lutnick in Washington on Tuesday.Liam Richards/The Canadian Press
Intergovernmental Affairs Minister Dominic LeBlanc met with U.S. Commerce Secretary Howard Lutnick in Washington on Tuesday as Canada aims to restart stalled negotiations over punishing tariffs ordered by U.S. President Donald Trump.
Justice Minister Sean Fraser, meanwhile, is also in the U.S. capital for his first sit-down with Attorney-General Pam Bondi, set for Wednesday morning, where the pair plan to discuss border security and cracking down on fentanyl trafficking.
The meetings mark a stepping up of bilateral engagement after weeks of little contact months into Mr. Trump’s trade war.
“Happy to be back in Washington, DC for a productive meeting with Howard Lutnick and his senior team this morning,” Mr. LeBlanc posted on social media Tuesday.
His office said the sit-down, at Commerce Department headquarters, also included Kirsten Hillman, Canada’s ambassador to the U.S., and Marc-André Blanchard, Prime Minister Mark Carney’s chief of staff.
It was the group’s first meeting since Mr. Carney further rolled back retaliatory tariffs on the U.S. last week.
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The Prime Minister said Mr. LeBlanc’s talks with Mr. Lutnick would focus on areas in which Mr. Trump is imposing sectoral tariffs, as well as on preparing for the review of the U.S.-Mexico-Canada Agreement that governs North American trade. The review and potential renegotiation is expected to kick off in the coming weeks.
“We’re seeing important challenges for key industries such as steel, aluminum, the automotive sector, copper and softwood lumber, and Mr. LeBlanc and our team are going to focus on these strategic sectors,” Mr. Carney said in Berlin at a joint news conference with German Chancellor Friedrich Merz.
Mr. Carney said last week that Mr. Trump told him dropping countertariffs would allow negotiations to restart. Mr. Lutnick agreed to a meeting within 48 hours of them coming off.
Mr. Trump has linked a different set of tariffs on Canada to complaints that Ottawa has not done enough to secure the border between the two countries, allowing fentanyl to get to the U.S.
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While the Canadian government has announced measures to step up border security – and pointed out that fentanyl entering the U.S. from Canada represents about 0.2 per cent of the total – Mr. Trump has remained unmoved.
At the start of August, Mr. Trump hiked his fentanyl-related tariffs on Canadian goods traded outside USMCA after the two countries missed the President’s deadline for a trade deal.
Mr. Fraser’s meeting with Ms. Bondi will also include Public Safety Minister Gary Anandasangaree and Kevin Brosseau, a senior civil servant who in February was named fentanyl czar after pressure from Mr. Trump to clamp down on the drug.
Jeremy Bellefeuille, the justice minister’s communications director, said Ms. Bondi extended the invitation to Mr. Fraser to meet. The aim of the meeting is to “strengthen collaboration” between Mr. Fraser and Ms. Bondi, he said. Meeting topics are set to include the Liberals’ work on justice issues such as bail and sentencing reform, and efforts to bolster border security.
On the sectoral tariffs, aluminum is widely seen as the most likely candidate for tariff relief, given U.S. industry’s reliance on imported aluminum, more than half of which comes from Canada. Among other things, it is used to make Ford’s wildly popular F-150 truck.
According to two industry sources with knowledge of the talks, Ottawa and Washington were close to reaching an agreement around a tariff-rate quota, or TRQ, system for aluminum before Aug. 1, but did not finalize the agreement. One of the sources said Washington refused to proceed while Canadian retaliatory tariffs remained in place.
Within a tariff-rate quota system, a certain quantity of imports is allowed tariff-free or at a lower tariff rate. Imports above the threshold are hit by much higher tariffs, with the goal of capping the amount that is imported.
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A third industry source said that Canada-U.S. talks have centred on a system under which Canadian steel and aluminum would both face U.S. import quotas. Metals under the quota threshold would face tariffs, likely of 10 or 15 per cent, the source said.
This source said that talks related to autos are more complicated because of the U.S.’s recently struck deals with the European Union, Japan and South Korea, which set tariffs on imported autos at 15 per cent. This means that Canada and Mexico must land a significantly better deal in order remain competitive with autos from outside North America.
The Globe and Mail is not naming the sources, because they were not authorized to disclose details of the negotiations.
Several of the recent agreements Mr. Trump has reached with trade partners involve tariff-rate quotas.
Britain agreed to a tariff-rate quota of 10 per cent for the first 100,000 cars exported to the U.S. Above the quota, the tariff rises to 27.5 per cent. Britain also agreed to a quota system for steel, as well as limits on Chinese investment in Britain’s steel industry.
On steel and aluminum, the U.S. and the EU agreed to “consider” using “tariff-rate quota solutions,” according to a joint statement from Washington and Brussels last week.
Quotas remain controversial because they limit export growth and weigh on future investment.
“They cap your growth potential, and we’re in a situation where our metal is needed,” Jean Simard, chief executive of the Canadian aluminum association, said in an interview last week. He said it would be better if Canadian aluminum was granted preferential tariff treatment, given its importance to U.S. industry.
But some industry representatives are coming to view quotas as the best of a bad situation.
“If you asked Canadian manufacturers a year ago: ‘Do you want quotas?’ They would have said, ‘No way,’” Dennis Darby, head of Canadian Manufacturers & Exporters said in an interview last week. “I think people would now say, ‘Okay, let’s see what a tariff-rate quota would be.’”