Canada seeks tariff exemptions as Donald Trump demands 'completely open markets'

Speaking Tuesday on U.S. television network CNBC, Commerce Secretary Howard Lutnick said Trump is ready to impose his threatened tariffs and “move on” unless deals are reached by Friday. Lutnick also said the U.S. has rejected offers from several countries, which he didn’t name, that fall short of the access Trump wants for American exports. 

“Many, many countries had made us OK offers to open their markets — you know, 50 per cent, 30 per cent … The president said, ‘No, no. I want them open,’” said Lutnick. 

“So now the price of a deal with the United States of America is black and white: completely open markets.” 

Trump has argued that the U.S. needs tariffs to wrest manufacturing and investment from other countries, and to correct unfair balances where the U.S. buys more from other countries than it sells to them. In Canada’s case, Trump has complained about limits to dairy imports, a digital services tax that Carney has since cancelled, and concerns about fentanyl, border security and the number of U.S. banks operating in Canada. 

Last week, Trump described the talks with Canada as “not really a negotiation” and suggested Canada could simply face tariffs set unilaterally in Washington. Carney later told reporters in Prince Edward Island that talks with the U.S. have been “difficult” because Ottawa’s negotiators are “fighting for Canada.” 

On Tuesday, sources who spoke to the Star on the condition that they were not identified because they are not authorized to speak about the negotiations said the talks are challenging because any progress that is made vanishes the next day when the Americans appear to change their minds. 

There is sense from those at the table that the U.S. isn’t able to convey its specific objectives to the Canadians on a consistent basis, said one frustrated insider. 

But the Canadian team is holding out hope that direct dialogue between Trump and Carney will break the impasse.

Trump’s latest tariff threat against Canada, detailed in an open letter to Carney earlier this month, is to impose a 35 per cent import duty on Canadian goods starting Aug. 1.

The U.S. president sent similar letters to dozens of other world leaders, threatening to finally impose the “reciprocal” tariffs first detailed in his “Liberation Day” announcement in April. At that time, Trump held a large placard for the cameras and announced a bevy of tariff rates the U.S. would impose on much of the world to overcome alleged trade unfairness. 

Trump has also threatened to impose a 50 per cent tariff on copper imports. According to the federal government, more than half of Canada’s copper and copper-based product exports — worth more than $4.8 billion — went to the U.S. in 2023. 

Canada, however, is among countries facing a host of additional U.S. tariffs. These now included 50 per cent duties on steel and aluminum and a 25 per cent tariff on automobiles.

Trump also imposed 25 per cent tariffs on Canadian products and 10 per cent tariffs on energy and critical minerals, which the U.S. linked to concerns about the deadly drug fentanyl and illegal immigration. However, on March 7, goods that comply with the Canada-United States Mexico Agreement (CUSMA) were exempt from those import duties.

A report from RBC Economics, published in April, estimated that about 86 per cent of Canadian exports should be able to enter the U.S. without any tariffs, thanks largely to the CUSMA exemption, which leaves steep import duties on Canadian autos (25 per cent), steel and aluminum (50 per cent).

David Paterson, Ontario’s envoy to Washington, said Tuesday he could not predict whether Canada is getting closer to a deal this week. He stressed that a top priority is preserving the exemption from Trump’s tariffs that cover a large portion of Canadian exports to the U.S., since they comply with CUSMA. Crediting Premier Doug Ford with helping to ensure a broad layer of Trump’s tariffs didn’t apply to CUSMA-compliant trade, Paterson said the government is likely striving to preserve that exemption ahead of Friday’s deadline.

“Keeping that (exemption) is, in our view, one of the most important things to sustain,” Paterson said.

Noting that Trump recently made trade deals with Japan and the European Union, Paterson said it is important for the Canadian side to look at what other countries are agreeing to. He also stressed that American officials are juggling talks with dozens of other countries that are potentially facing tariffs on Friday. “You can imagine the premium on their time,” he said, describing the talks as a “new mechanism of discussion that we’ve never seen before.”