Muhammad Amanullah | August 18, 2026
Canada and the United States have entered a critical stage in their trade negotiations, with Canadian Prime Minister Mark Carney warning that the next 48 hours could prove decisive as Ottawa tries to prevent new U.S. tariffs from taking effect.
Speaking to reporters in St. John’s on Monday, Carney described the negotiations as highly sensitive and intense. He declined to publicly discuss details of the talks, saying negotiations are better handled through diplomatic channels.
Carney Says Talks Are at a Critical Stage
Carney said negotiations between Canada and the United States remain ongoing and that Canada is approaching the discussions from a position of strength.
The prime minister said his government is prepared for different outcomes. While Ottawa is working to reach an agreement, it also has contingency plans should the negotiations fail to produce the desired result.
Carney Expected to Speak With Trump
Carney said he expects to have opportunities to speak with U.S. President Donald Trump over the next 48 hours.
The two leaders also held a telephone conversation Monday afternoon, although the Prime Minister’s Office did not immediately release details about the discussion.
The expected communication between Carney and Trump could prove important as both sides attempt to resolve outstanding trade issues before the tariff deadline.
New Tariffs Could Take Effect August 19
The central objective of Canada’s negotiations is to prevent new tariffs threatened by the Trump administration under Section 338.
The proposed measures could take effect on August 19 and could result in additional duties of up to 50 per cent on certain Canadian products.
Canada is already dealing with U.S. tariffs affecting several major industries, including steel, aluminum, automobiles and softwood lumber.
Ottawa is therefore seeking not only to prevent the new tariffs but also to secure reductions in existing duties affecting Canadian exporters.
Major Meeting Held in Washington
Canadian Trade Minister Dominic LeBlanc and chief trade negotiator Janyce Charette met Monday with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick in Washington.
The meeting lasted approximately one hour and 45 minutes, making it one of the longest high-level meetings between Canadian and American officials in recent weeks.
After the meeting, LeBlanc told reporters that Canada would continue working toward an agreement and that negotiations were not yet complete.
What the United States Wants
Washington is seeking several concessions from Canada as part of a potential agreement.
One major U.S. demand is for American wine and other alcoholic beverages to become available again through provincial government liquor stores.
The United States is also seeking the removal of Canadian retaliatory tariffs on American vehicles.
Another major issue involves Canada’s supply-management system, particularly the way dairy import quotas are allocated.
Canada’s Priorities
Canada’s main objective is to prevent the new Section 338 tariffs from taking effect.
Ottawa also wants the United States to reduce tariffs already imposed on key Canadian industries.
Canadian officials are particularly focused on improving market conditions for the softwood lumber, steel, aluminum and automotive sectors.
Provincial Policies Create Additional Pressure
Provincial policies regarding American alcohol have become one of the major obstacles in the negotiations.
Some Canadian provinces are reluctant to immediately change restrictions on American alcohol, while Washington considers the issue an important part of the negotiations.
This has created an additional challenge for the federal government, which must balance the demands of Washington with the interests of Canada’s provinces.
Canada Preparing for Possible Retaliation
Canadian officials are concerned that U.S. tariffs taking effect on August 19 could further escalate trade tensions between the two countries.
Erin O’Toole, a member of Carney’s Canada-U.S. Advisory Council and a former Conservative leader, said Canada has made some progress in the negotiations.
However, he said an important question remains whether Trump will ultimately approve lower tariff rates negotiated by American officials.
If tariffs of up to 50 per cent are imposed, Canada could have limited options other than taking retaliatory measures. Canadian officials are already preparing potential responses.
Risk of a Wider Trade War
Businesses and Canadian officials are concerned that higher tariffs could put additional pressure on both economies.
Canada and the United States are major trading partners, meaning increased tariffs could affect industries, employment, consumer prices and business costs on both sides of the border.
A cycle of retaliatory tariffs could further intensify existing trade disputes and create additional uncertainty for companies operating across the two countries.
Next 48 Hours Could Be Decisive
Carney has described the next 48 hours as particularly important as Canadian and American officials work toward a possible agreement before the August 19 deadline.
However, significant differences remain between the demands of the two sides, and Washington has not indicated that it is prepared to completely remove its tariff measures.
Attention is now focused on the expected communication between Carney and Trump. The coming hours could determine whether Canada and the United States reach a compromise to ease trade tensions or whether new tariffs trigger another major phase in the two countries’ trade dispute.
