Canada and the United States appear to be closing in on a trade agreement after weeks of escalating tariff threats, but Canadian businesses are unlikely to consider the dispute settled until the details are on paper.
Trade Minister Dominic LeBlanc said Thursday that the two countries were “very close” to an agreement following another round of talks with U.S. Trade Representative Jamieson Greer in Washington. The negotiations have taken on new urgency after U.S. President Donald Trump threatened a 50% tariff on roughly $20 billion worth of Canadian goods. The latest deadline for those tariffs is Saturday.
For Canadian companies, avoiding that tariff would provide immediate relief. The proposed duties cover products ranging from furniture and wine to dairy products, while the broader trade dispute has also affected industries such as steel, aluminum and automotive manufacturing. Earlier this week, Trump delayed the new tariffs for three days after reporting progress in negotiations.
A potential agreement could go further. Reuters reported Wednesday that Washington may reduce some existing tariffs on Canadian-made cars and trucks as well as key metals. That would be particularly important for Ontario manufacturers and other businesses whose supply chains cross the border repeatedly before a finished product reaches a customer.
The immediate question is whether negotiators can finish the deal before Saturday. The larger question is what comes after it.
Canada and the United States conduct an enormous amount of business with one another, and the uncertainty created by repeated tariff threats has made planning more difficult. A manufacturer considering new equipment or a retailer signing a long-term supply contract needs some confidence about what goods will cost six months or a year from now. Even when a tariff never takes effect, the possibility that it could can influence investment decisions.
There is also the unresolved future of the United States-Mexico-Canada Agreement. The Trump administration declined to extend the agreement during its formal review in July, beginning a longer process that could eventually lead to its expiration unless the three countries reach an understanding.
That makes the current negotiations important beyond the specific tariffs being discussed. A successful agreement could establish a more workable relationship ahead of future North American trade talks. A breakdown could reinforce concerns that businesses will continue facing sudden changes in the rules governing cross-border commerce.
Canada has responded to the uncertainty by placing greater emphasis on domestic trade and diversifying international markets. Those efforts are unlikely to disappear even if Ottawa and Washington reach an agreement this weekend.
The United States will remain Canada’s largest trading partner because geography, infrastructure and decades of economic integration make the relationship difficult to replicate elsewhere. What Canadian businesses increasingly want is greater predictability within that relationship.
A deal this week could provide some of it. Whether that stability lasts will matter much more.
