Trump and Carney Hold High-Stakes Talks Before Canada Tariff Deadline

United States President Donald Trump and Canadian Prime Minister Mark Carney spoke by phone on Monday as negotiators sought to avert new tariffs on Canadian imports before a fast-approaching deadline.

Officials said the proposed measure would set a 50 percent tariff rate and is scheduled to begin at midnight on Wednesday. Officials also said the planned action could put roughly $20 billion in two-way trade at risk.

Automotive content rules become the main sticking point

Washington is pressing for an approach in which Officials familiar with the talks said the most immediate deadlock centers on automotive trade and the definition of vehicle content for tariff treatment. Washington is pressing for an approach in which only components produced in the United States would count toward qualifying for tariff exemptions. Ottawa is arguing for a broader standard that would recognize North American content, officials said. The difference matters because it shapes how automakers would prove compliance and whether cross-border supply chains can continue operating under terms companies can manage. Section 232 tariff talks include a possible rate change Negotiators are also discussing possible adjustments to existing Section 232 automotive tariffs. Industry and official accounts referenced in the negotiations said the talks have included a potential reduction of those tariffs from 25 percent to 15 percent.

Industry officials cautioned that even a 15 percent levy would remain economically unsustainable under current profit margins. Those officials pointed to limited room to raise prices and said duties would quickly translate into higher costs for high-volume vehicle movements across the border.

USMCA uncertainty adds to pressure before the deadline

The dispute is unfolding as companies face wider uncertainty around the United States-Mexico-Canada Agreement (USMCA). Officials said the United States declined to renew the agreement last month, a development that has added to the uncertainty for businesses that depend on stable cross-border trade rules.

Canadian officials, including Prime Minister Carney, have described the ongoing negotiations as delicate, officials said. They linked that assessment to the narrow timeline, the complexity of content calculations, and the stakes for sectors beyond autos.

Commerce Department certification changes and potential spillovers

Alongside the talks, the US Commerce Department has introduced new, simplified certification rules for automakers to report US-sourced content. Officials said the changes are meant to streamline reporting, though their practical impact will depend on how any final exemptions are defined.

Officials said that if an agreement is not reached before the Wednesday midnight deadline, the tariffs are expected to cause significant disruptions across lumber, dairy, and manufacturing. Officials said the scale and timing of any disruptions remain uncertain and would hinge on implementation details and how quickly companies can adjust shipping and sourcing plans.