Canada and the United States are still at odds as negotiations for a tariff agreement continue in the lead-up to the latest deadline set by U.S. President Donald Trump. Insider sources have revealed that the federal government is not optimistic about an imminent deal due to significant disagreements between the two parties. Key issues remain unresolved, keeping them far apart in their positions.
Dominic LeBlanc, the Trade Minister for Canada, briefed his provincial and territorial counterparts on the progress of the negotiations. Additionally, he provided updates to members of the prime minister’s advisory committee on Canada-U.S. economic relations. Although details of the briefings are known to the sources, they are not authorized to speak publicly.
Trade discussions between Canada and the U.S. intensified after Trump’s threat to impose a hefty 50% tariff on numerous Canadian goods starting on August 19. An insider familiar with the talks mentioned that optimism on the Canadian side is diminishing as the Americans are unwilling to shift from their latest proposal. The offer includes reducing sectoral tariffs on automobiles to 12.5%, a concession that Canada deems insufficient.
Quebec’s Economy Minister Bernard Drainville, briefed by LeBlanc, emphasized the significant gap remaining between the two countries. He stated that an agreement is still out of reach, with no signs of Trump postponing the application of the 50% tariffs. Erin O’Toole, a former Conservative leader and advisory committee member, echoed this sentiment, stating that the positions of Canada and the U.S. are still widely disparate.
The federal government has instructed provinces to prepare for the reintroduction of American alcohol on store shelves in the event of a tariff resolution. Moreover, provinces and territories have been asked to be ready to eliminate retaliatory procurement rules that favor Canadian suppliers if an agreement is reached. Trump’s grievances about provincial alcohol bans, dairy quotas, and auto tariffs were cited as reasons for the potential imposition of new tariffs.
Discussions about a potential deal involve the U.S. refraining from imposing new levies while reducing existing sectoral tariffs on Canadian steel, aluminum, autos, and forest products. In return, Canada would need to make concessions on the issues raised in Trump’s latest threat. Quebec Premier Christine Fréchette emphasized the importance of preserving Canada’s supply management system for dairy, considering it a non-negotiable aspect of the negotiations.
Recent reports suggest that Canada is willing to end alcohol bans in exchange for tariff relief. Trump has maintained sectoral tariffs on specific industries since the previous year. LeBlanc has been in frequent discussions with U.S. Trade Representative Jamieson Greer, aiming to present viable options to both Canadian and American leaders after the latest talks.
Greer described the talks with Canada as constructive, noting that Washington is pushing for the removal of retaliatory measures such as alcohol bans. Industry sources highlighted the August 19 deadline as critical, indicating that continuing talks would be challenging if the 50% tariffs are implemented.
The ban on alcohol imports was Canada’s initial response to Trump’s tariff threats last year, causing a significant decline in U.S. wine, beer, and spirit exports. American spirit-makers reported severe financial impacts, and wine sales in Canada from the U.S. plummeted in 2025. Ontario Premier Doug Ford expressed readiness to reintroduce American alcohol if a fair deal is reached, emphasizing that tariffs on Canada ultimately harm American citizens. Despite the possibility of American alcohol returning, some Canadians have expressed reluctance to purchase such products.
