Canada rejects US tariff offer as 50% deadline nears

Canada has rejected the latest US tariff-reduction proposal as insufficient, leaving less than a week before Washington's threatened 50 percent duties on roughly $20 billion of Canadian goods take effect Aug 19.

"We remain committed at the negotiating table and continue to work diligently to advance and staunchly defend Canadian interests," Dominic LeBlanc, Canada's minister responsible for trade with the US, said after meeting US Trade Representative Jamieson Greer in Washington on Tuesday.

The session marked the third between the two sides in as many weeks. Canadian officials involved in the talks were dissatisfied with the latest US proposal, which offered to reduce several tariffs but fell short of Ottawa's demands, according to two sources cited by CBC News. The two countries are negotiating daily to prevent an escalation of the trade war.

The stakes are substantial. US-Canada goods trade reached $719.5 billion in 2025, with US imports from Canada totaling $383 billion. If the 50 percent tariffs take effect, cross-border goods flows face higher costs, and producers and consumers in both countries could feel the impact through price changes and supply chain disruptions.

Trump signed three proclamations last month imposing the 50 percent tariffs on Canadian goods across the auto, alcohol, and dairy sectors, citing what his administration characterized as discriminatory treatment of American products. The measures would cover roughly $20 billion worth of goods imported from Canada, with no exemption for products that would otherwise qualify under the United States-Mexico-Canada Agreement. Energy, potash, fish, critical minerals, and goods already subject to separate tariffs are excluded.

The White House has pointed to Canada's 25 percent tariff on US-made vehicles, a near-total halt on American alcohol purchasing by Canadian provinces, and preferential dairy market access granted to the European Union over the United States as the basis for the measures.

Negotiating items on the table include eliminating Canada's retaliatory auto tariffs, lifting provincial restrictions on American alcohol sales, and reworking the structure of dairy quota arrangements. Canadian and US trade representatives aim to present a framework for a deal to Trump before the deadline, according to BNN Bloomberg.

MacNaughton warns against piecemeal concessions

Former Canadian ambassador to the United States David MacNaughton said Tuesday that while Canada has a substantial package of proposals, the American side may not be prepared for a comprehensive deal. "At the end of the day, the only person that's going to make the final deal is going to be the president, and I'm not sure that he's ready right now to do a comprehensive deal, which is really what the Canadian side want," MacNaughton told BNN Bloomberg. He cautioned against Canada making piecemeal concessions that could leave it exposed to further tariff threats.

Colin Robertson, a former Canadian diplomat who negotiated the original NAFTA and CUSMA, warned the escalating fight could end with the trade agreement being torn apart. "I don't know how this all ends, but right now it looks like it's going to end in tears," Robertson told BNN Bloomberg. He said Canada should match the US strategy precisely, offering reversible tariffs for reversible tariffs and permanent concessions only for durable gains.

The pressure on Canada is significant given that the US is its main trading partner. The US recorded a $46.4 billion goods trade deficit with Canada in 2025, down 25.1 percent from the prior year as US imports from Canada fell 7 percent. Canada has already faced various US tariffs, including a 10 percent Section 301 tariff on most imported goods imposed July 24, 2026, though CUSMA-eligible goods remained exempt. Sectoral tariffs on steel, aluminium, copper, vehicles, and timber remain in place.

State of Trade 2026 shows diversification gains

Canada has begun promoting trade diversification. The State of Trade 2026 report said Canada's goods trade with the US declined in 2025 because of tariffs and trade policy uncertainty, while exports to non-US markets increased, driven particularly by gold and energy commodities.

Saskatchewan Premier Scott Moe confirmed negotiations have intensified in recent weeks, with dairy among the sensitive issues under discussion. He said both sides need to maintain broader goals of reviewing and updating CUSMA.

With less than a week before the Aug 19 deadline, the negotiating window is narrowing. If Washington and Ottawa fail to reach a compromise, the 50 percent tariffs could add pressure on sectors dependent on cross-border trade while increasing uncertainty in the economic relationship between the two countries. The office of US Trade Representative Jamieson Greer and the office of Dominic LeBlanc have yet to respond to requests for comment on the latest proposal.

This article is for informational purposes only and does not constitute investment advice.