Canada and United States resume trade negotiations after August collapse

Ottawa and Washington announced on Sunday that formal trade talks will resume, marking the third round of negotiations in just over a year. Prime Minister Mark Carney said he had spoken with President Donald Trump about “the outlines of a mutually beneficial trade deal” and that “our teams will now be working in the coming weeks to deliver that outcome.”

The talks aim to revive discussions that stalled in August when negotiators in Washington spent weeks trying to lower, but not eliminate, tariffs on key Canadian industries in exchange for concessions from Ottawa. At that time, the United States sought the removal of Canadian retaliatory tariffs on automobiles, steel, aluminum and wood, as well as changes to dairy quota allocations and other trade measures. Canada’s primary objective was relief from Section 232 tariffs on automobiles, steel, aluminum and wood, seeking reduced rates rather than full removal.

Details of the August proposal, as reported, included a reduction of U.S. tariffs on Canadian cars to 15% from 25%, with a carve-out for U.S. parts that would bring the effective rate into single digits. Steel and aluminum tariffs would have been cut to 25% from 50%, subject to a four-million-tonne quota for steel. In return, Canada would have restocked U.S. alcohol, lifted procurement restrictions, withdrawn retaliatory tariffs and accepted the U.S. interpretation of dairy import-license allocation.

Carney later said the United States asked for too much and offered too little, citing unresolved issues such as tariffs on medium- and heavy-duty trucks, proposed changes to online streaming rules requiring promotion of Canadian (including French-language) content, and language that could limit Canada’s ability to negotiate future trade agreements. Canada’s chief trade negotiator Janice Charette noted that her team never saw a full draft of the proposal, making it difficult to assess the extent of U.S. demands.

Since the August collapse, both countries have implemented and adjusted tariffs on roughly $28 billion worth of goods, with each side removing some duties while adding new ones to maintain overall levy levels. The renewed talks seek an “off-ramp” from the ongoing trade dispute and a path toward a more stable economic relationship.