Carney-Trump Call Fails to Break Impasse as US Tariff Deadline Nears

Prime Minister Mark Carney and US President Donald Trump spoke by phone on Tuesday afternoon, marking their second conversation this week, as Canada scrambled to avert new 50% tariffs scheduled to take effect at midnight. The Prime Minister's Office confirmed the call but offered no details on the status of negotiations, which have dragged on for weeks.

The new US tariffs would apply to roughly $20 billion in Canadian imports, regardless of whether those goods qualify for preferential treatment under the US-Mexico-Canada Agreement (USMCA). Until now, that pact has shielded much of Canadian industry from earlier US trade actions.

Industry sources said existing US tariffs on Canadian vehicles remain a key sticking point. Negotiators have discussed reducing the Section 232 tariff on Canadian-built vehicles from 25% to 15%, with further cuts tied to the share of US content in each vehicle. However, a Canadian auto industry official warned that even 15% would be unsustainable, noting that pre-tariff profit margins in the sector averaged just 6%. The official added that roughly half the value of every Canadian-built vehicle originates in the US, making it impossible to hurt Canada without hurting American automakers.

A separate dispute centers on how tariff deductions are calculated. Washington wants only US-produced content counted, while Canada is pushing for all North American content, including Canadian and Mexican parts, to be eligible.

Trade experts and business groups warn the new tariffs could trigger job losses and closures in sectors such as lumber, wine, and dairy. Candace Laing, CEO of the Canadian Chamber of Commerce, said businesses have been delaying hiring and investment for over a year due to uncertainty. "There are billions in goods per year that were not impacted before, but now are at risk of being impacted significantly," she said.

Canada's trade minister, 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. Greer has repeatedly cited Canadian retaliatory tariffs, provincial bans on US liquor, and Canada's dairy supply management system as grievances.

Earlier Tuesday, the US Commerce Department issued new rules requiring automakers exporting from Canada and Mexico to certify their US content levels once per year, down from twice. However, recertification must be completed by September 30 for deductions in the new annual cycle starting December 1.

A Canadian government source said 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, while expressing hope the US is keen to reach a deal.