With a 12:01 a.m. ET deadline looming on Saturday, the United States and Canada are racing to strike a deal that could determine whether steep tariffs on billions of dollars worth of Canadian goods take effect — a move that would mark a major escalation in the trade war.
Earlier this week, President Donald Trump granted a three-day delay for 50% tariffs on $20 billion of Canadian exports to the US, telling reporters that a deal had been reached to avert the levies, pending final negotiation.
“We’ve come to a deal with Canada,” Trump said on Wednesday. “We’re going to give something, and we’re doing certain things,” he added, without elaborating further.
Canada-US Trade Minister Dominic LeBlanc was spotted Friday outside the US Trade Representative’s office in Washington, where he was expected to meet with Trump’s top trade official, Jamieson Greer. The two met multiple times throughout the week as well. After Thursday’s meeting, LeBlanc said the two sides were “very close” to reaching a deal.
But no deal has emerged yet, underscoring the remaining sticking points in the talks.
The latest standoff is the product of a trade relationship that has steadily deteriorated since Trump returned to office.
Trump imposed tariffs on major Canadian industries, including autos, steel and aluminum, while Canada has retaliated with its own measures. While Canadian Prime Minister Mark Carney walked back his most sweeping countermeasures last year, Trump has remained irked by Canadian provincial leaders’ bans of American alcohol. But that’s hardly the only sticking point.
Canada is offering to put American alcohol back on provincial liquor store shelves, open up some provincial procurement that had been reserved for Canadian companies, and make changes that allow more US dairy products to reach major Canadian retailers, a source familiar with the negotiations told CNN.
Canada is also offering to eliminate some of its 25% retaliatory tariffs on US cars, steel and aluminum, while the US has discussed lowering its duties on those Canadian goods.
Increased access for American goods in Canada, however, may not generate as much of an impact as Trump may be seeking, given Canadians have increasingly sworn off American goods and cut back on their travel to the country.
Nevertheless, a major sticking point appears to be the Keystone XL Pipeline project. The White House and representatives from Carney’s office didn’t respond to CNN’s requests for comment.
Earlier this week, when the president announced the two sides were close to a deal, prompting the three-day postponement of duties, he suggested the long-stalled Keystone XL pipeline could be revived. “The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” he wrote in a Truth Social post.
However, that ship may have sailed. The contentious 1,200-mile project designed to transport hundreds of thousands more barrels of crude a day from Canada to the US was essentially canceled by former President Joe Biden, who revoked a key permit for it on his first day in office in 2021. The project has faced significant backlash from environmentalists.
The pipeline’s former developer, TC Energy, is pursuing a different initiative that would use some of the Keystone XL infrastructure, making a revival of the original project largely out of Carney’s hands.
“The Keystone XL expansion project remains stalled or not being pursued,” the source said.
