Big gap remains between Canada and U.S. in ongoing trade talks: source

Canada and the United States are not close to signing a trade deal to reduce current tariffs and avoid new American tariffs coming into place next week, according to a source with direct knowledge of the trade negotiations.

The distance on a potential deal comes after a week of negotiations in Washington, labelled by multiple sources as constructive, with negotiators on both sides “nerding out” and reviewing individual tariffs on a line-by-line basis.

Even then, the source told Global News, there is still a way to go before any deal could be struck.

Global News has agreed not to identify the sources because they were not authorized to speak publicly about the trade talks.

Any deal the Trump administration is willing to sign will have some form of tariffs on steel, aluminum, autos and lumber, according to sources. Conversely, Canada is not willing to sign an agreement that does not have a substantial reduction in American tariffs.

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If a deal is reached, tariffs on Canadian autos and parts compliant under the Canada-U.S.-Mexico Agreement (CUSMA) would remain in place, but it is expected that they would be reduced from the current 25 per cent level, according to a source familiar with the talks.

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Auto industry insiders have told Global News that they would not support any tariff level on CUSMA-complaint parts and autos, saying it would represent a major threat to the Canadian industry.

“We shouldn’t be offering any concessions to the United States right now. The reality is the U.S. has imposed tariffs on Canada,” Lana Payne, Unifor’s national president said Friday at a news conference in Brampton, Ont..

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The U.S. is seeking a change in current quota allotments for U.S. dairy that can be sold into Canada tariff free and for American alcohol to be put back onto all provincial liquor store shelves.

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The Dairy Farmers of Canada said in a statement Thursday that it is “imperative that no more concessions on dairy or supply management are made in talks with the United States.”

U.S. Trade Representative Jamieson Greer repeated Friday that new 50 per cent tariffs on some Canadian goods are in direct response to the retaliatory measures.

Greer, speaking to reporters at the Iowa State Fair, likened the federal and provincial measures to “the kind of things that China would do.” He said those are things that would have to be resolved.

While the Canadian government is willing to walk away from any deal, it is the preference of the Carney government to find an agreement now to avoid new tariffs coming into place on Aug. 19, according to multiple sources.

That strategy is a part of a three-pronged plan, outlined to sources briefed by the Carney government.

The first step would be to cut a deal on sectorial tariffs and avoid new ones coming into place, followed by a second step where both countries sign partnerships in areas like energy and defence.

Step three would be to renegotiate CUSMA in a more stable environment.

The U.S. opted to not agree to a renewal of the free trade pact at its scheduled review last month, despite Canada and Mexico advocating for a new 16-year term.