Trump is weighing whether to grant Canada a tariff reprieve – Politico
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Politico is reporting that a potential interim trade deal between the US and Canada is now on President Trump’s desk, according to people familiar with the negotiations, leaving Trump to decide whether to accept an interim deal before broader USMCA talks or allow the planned 50% tariff on certain Canadian goods to take effect at midnight on August 19.
US and Canadian negotiators have held intensive talks in recent days, attempting to resolve several longstanding trade disputes. The emerging package would reportedly include Canadian concessions on dairy tariffs, the removal of some Canadian retaliatory measures against US goods, including provincial restrictions on US alcohol, and progress toward reducing US tariffs on Canadian automobiles.
However, autos remain the biggest sticking point. Canada is seeking reductions in the 25% US tariffs on automobiles and wants the duties to apply primarily to vehicle content produced outside North America. Washington, meanwhile, continues to push Canada to remove barriers to US products and address its protectionist policies.
The proposed agreement is being viewed as an “early harvest” or interim deal that could unlock broader negotiations over the USMCA, the North American trade agreement scheduled for review this year. While the tariffs due Wednesday would affect only a relatively small portion of bilateral trade, failure to reach an agreement could damage negotiations covering nearly $1 trillion in annual US-Canada goods and services trade.
The political stakes are significant for both governments. Canadian Prime Minister Carney faces domestic pressure against making concessions to Washington, particularly given widespread Canadian frustration with Trump’s trade policies and his repeated comments about Canada becoming the 51st US state.
Trump also faces political risks if tariffs go ahead. Higher trade costs could create additional economic pressure ahead of the US midterm elections, particularly in states such as Michigan and Maine, where Canada-US trade is economically important.
Steel and aluminum remain another major unresolved issue. Canada is seeking relief from US tariffs, but the Trump administration has reportedly shown little willingness to compromise on the 50% steel tariffs, with US Trade Representative Greer arguing that the measures are benefiting domestic steel production.
This article was written by Giuseppe Dellamotta at investinglive.com.