Muhammad Amanullah | August 17, 2026
The True Post — Trade negotiations between Canada and the United States have entered a decisive stage, but Ottawa fears that it may not be able to reach a deal in time to prevent new U.S. tariffs on Canadian products from taking effect on Wednesday.
Canadian officials are working to convince Washington to reduce existing sector-specific tariffs while also facing the difficult task of persuading provinces to lift restrictions on the sale of American alcohol.
Talks Intensify
Canadian Trade Minister Dominic LeBlanc met U.S. Trade Representative Jamieson Greer again on Sunday. It was the third meeting between the two officials in less than a week.
The virtual meeting lasted approximately one hour, with the two sides discussing outstanding trade issues between Canada and the United States.
Ottawa has been trying for weeks to negotiate a comprehensive trade agreement with Washington that would not only address the newly announced tariffs but also secure reductions in existing tariffs on steel, aluminum, automobiles and lumber.
Risk of New 50% Tariffs
The U.S. administration has announced new 50% tariffs on approximately $28 billion worth of Canadian products, with the measures expected to take effect Wednesday.
The affected goods represent roughly five percent of Canada’s total exports to the United States.
Canada is seeking not only the removal of the new tariffs but also significant reductions in the existing 50% tariffs on steel and aluminum and 25% tariffs on automobiles.
However, negotiations have so far produced little significant progress on these sector-specific tariffs.
American Alcohol Becomes a Major Issue
The return of American alcohol to Canadian stores has also emerged as a major issue in the negotiations.
The U.S. government has criticized restrictions imposed by several Canadian provinces on the sale of American alcohol and has identified the measures as a significant obstacle in the talks.
Ottawa has told the provinces that if a comprehensive agreement is reached, American alcohol will need to return to store shelves. However, the federal government requires provincial cooperation because the restrictions were imposed at the provincial level.
So far, only Alberta and Saskatchewan have restored sales of American alcohol, while several other provinces continue to maintain restrictions.
Ontario Premier Doug Ford has said he would restore American alcohol sales only if a trade agreement guarantees protection for key sectors including steel, automobiles, forestry, agriculture and manufacturing.
Dairy Sector Also at the Center of Dispute
Trade in dairy products between Canada and the United States remains another major point of disagreement.
U.S. President Donald Trump has long complained that Canada does not provide sufficient access to its domestic market for American dairy products.
Quebec, however, has made clear that it will not compromise on Canada’s supply-management system.
The Quebec government considers the dairy sector a critical issue for the province and has indicated that any concessions in this area would be highly sensitive.
Dispute Over the Lumber Industry
British Columbia is also taking a firm position on its demands regarding a potential trade agreement.
The provincial government wants reductions in U.S. tariffs on Canadian softwood lumber to be included in any comprehensive agreement.
British Columbia Premier David Eby has linked the removal of restrictions on American alcohol to relief for the province’s lumber industry.
Eby argues that British Columbia’s softwood lumber sector is directly affected by U.S. tariffs and should therefore play a central role in any broader trade agreement.
However, sources familiar with the negotiations say the U.S. proposal does not include a significant reduction in lumber tariffs.
Washington reportedly wants to address the lumber issue separately, while British Columbia is pushing for it to be included in the broader trade agreement.
Pressure Will Increase if No Deal Is Reached
The situation has placed the Canadian government in a difficult position.
Ottawa needs to secure tariff relief from Washington while persuading provinces to make concessions involving American alcohol, dairy products and other trade-related issues.
At the same time, provinces are reluctant to compromise on measures they consider important to their own industries.
The situation is particularly significant for British Columbia and Quebec. If the new U.S. tariffs take effect, approximately 13% of British Columbia’s exports and 10% of Quebec’s exports could be affected.
If Canada and the United States fail to reach an agreement before Wednesday’s deadline, pressure on major sectors of the Canadian economy could increase, potentially pushing the two countries into a new phase of their trade dispute.
Ottawa could then face growing political and economic pressure to offer additional concessions in an effort to prevent the trade conflict from escalating further.
