Canada Proposes Auto Tariff Trade-Off to Avoid Trump Penalties

Mark Carney, the Prime Minister of Canada, is leading efforts to secure a trade agreement with the United States to reduce tariffs on autos, steel, aluminum, and forestry products. Canadian officials have proposed accepting U.S. auto tariffs in exchange for reduced levies on vehicles that comply with the United States-Mexico-Canada Agreement, which would lower the current 25 per cent tariff on Canadian auto exports.

President Donald Trump has threatened to impose 50 per cent tariffs on an additional US$20-billion of Canadian exports if a deal is not reached by August 19. In response, U.S. negotiators are demanding that Canada eliminate all retaliatory tariffs on the American auto sector and that Canadian provinces end bans on the sale of American alcohol.

Canadian chief negotiator Janice Charette warned that failure to reach an agreement by the deadline will force Canada to retaliate and result in the cessation of trade talks. Minister Dominic LeBlanc has held multiple meetings with U.S. Trade Representative Jamieson Greer in Washington to resolve the dispute, though any agreement to lift alcohol bans would require the cooperation of Ontario Premier Doug Ford.