Carney-Trump call fails to break tariff impasse as deadline looms

Prime Minister Mark Carney spoke with US President Donald Trump on Monday as Canada races to avert new 50% tariffs set to take effect at midnight Wednesday. The call, confirmed by Carney's office on Tuesday, came amid ongoing negotiations in Washington, but no breakthrough was announced.

The new US tariffs would apply to roughly $20 billion worth of Canadian imports and would not be waived even for goods that qualify under the US-Mexico-Canada Agreement (USMCA). That pact has so far shielded much of Canadian industry from earlier US duties.

Trade experts and business groups warn the tariffs could trigger job losses and closures in sectors such as lumber, wine, and dairy, while weakening the protections Canadian exporters currently enjoy under the continental trade deal. The dispute could also complicate broader USMCA negotiations.

"There are billions in goods per year that were not impacted before, but now are at risk of being impacted significantly," said Candace Laing, CEO of the Canadian Chamber of Commerce. She added that businesses have been "doing a high-wire act for well over a year, holding off on hiring, investment and growing in Canada."

Canada's minister for US trade, Dominic LeBlanc, and chief negotiator Janice Charette have been in Washington since last week. On Monday, they met for nearly two hours with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.

A key sticking point remains US tariffs on Canadian vehicles. The two sides have discussed reducing the Section 232 tariff on Canadian vehicles from 25% to 15%, with further cuts tied to the amount of US content in each vehicle. However, they disagree on how that content should be calculated. Washington wants only US-made content deducted from the tariff, while Canada is pushing for all North American content—including Canadian and Mexican parts—to be excluded.

A Canadian government source said last week that all options remain on the table if the tariffs take effect, including government support for affected industries and a possible suspension of bilateral trade talks. The source expressed hope that the US is keen to reach a deal.