Canadian negotiators are concerned about the potential imposition of new U.S. tariffs set to take effect on Wednesday, with challenges in securing relief from existing sectoral tariffs and convincing provinces to lift restrictions on American alcohol. Sources familiar with the negotiations revealed that talks have been ongoing between Canada and the U.S., with Trade Minister Dominic LeBlanc meeting with U.S. Trade Representative Jamieson Greer for the third time in less than a week.

The primary objective for Ottawa has been to reach a “comprehensive agreement” with Washington, aiming to have the Trump administration eliminate the impending 50 percent tariffs on nearly $28 billion worth of Canadian goods. Additionally, a crucial part of the deal would involve lowering the existing sectoral tariffs impacting industries such as steel, aluminum, auto, and lumber.

Sources emphasized the importance of a comprehensive agreement to gain provincial support, particularly in reinstating American alcohol sales in Canada, a key demand from the Trump administration. Despite ongoing negotiations, the U.S. has not shown willingness to significantly reduce existing sectoral tariffs, leading to significant gaps in the discussions that need to be addressed.

Provinces have expressed reluctance to lift their bans on American alcohol without tangible relief on tariffs affecting their local industries. This stance has complicated the negotiations, with concerns arising that a finalized deal may be elusive if provincial opposition persists. Ottawa has communicated to provinces the necessity of concessions on issues raised by the U.S., such as provincial bans on U.S. alcohol, dairy import quotas, and retaliatory tariffs on U.S. autos, as prerequisites for avoiding the impending tariffs.

Notably, Quebec stands firm on preserving its dairy supply management system, a contentious issue in trade relations with the U.S. British Columbia has also emphasized the importance of including softwood lumber tariffs in the trade discussions, highlighting the significance of this sector to the Canadian economy.

The urgency for provinces to unify in support of the negotiations has been stressed, as the U.S. appears reluctant to extend the looming tariff deadline. Efforts to maintain a cohesive “Team Canada approach” have been emphasized by federal officials in engaging with provincial and territorial governments to navigate the complexities of the trade negotiations effectively.