Canada set for U.S. tariff relief, source says as Carney, Trump tout deal

After weeks of intense trade talks with the United States, which came with the threat of sweeping 50 per cent tariffs hanging over the Canadian economy, Canada is on track to secure reductions to steel, aluminum and auto tariffs, according to a source with direct knowledge of negotiations.

Premiers, meanwhile, say Prime Minister Mark Carney has asked provinces to restock American alcohol on their shelves as Canada finalizes the new trade deal.

Carney on Wednesday said Canada and the U.S. were “moving towards an agreement” that reinforces the “Canadian advantage,” while U.S. President Donald Trump said “we’ve come to a deal” that’s “very fair” for both countries.

“We have more work to do,” Canada-U.S. Trade Minister Dominic LeBlanc told reporters in Ottawa, where he travelled after his final meetings in Washington to attend a cabinet meeting with Carney on Wednesday afternoon.

He said Canada’s chief trade negotiator Janice Charette was still finalizing “the important work that we need to do over the next little while.”

Details on the exact tariff reductions that Canada could see aren’t clear, though Trump appeared to confirm some relief would take place.

“We may bring some of the tariffs down to a level where other countries are, because Canada was paying a higher tariff,” Trump said from the White House on Wednesday.

Softwood lumber, however, appears to be a different story, with the source pessimistic about relief there — matching what industry insiders have told Global News for weeks.

On autos, talks continue over both the tariff rate and if they will apply to Canadian cars and parts compliant with the Canada-U.S.-Mexico Agreement (CUSMA), according to the source, who Global News has agreed not to identify because they were not authorized to speak publicly about the trade talks.

Industry players have warned Ottawa that if the U.S. proceeds with its proposed 15 per cent tariff on Canadian-made vehicles and parts — down from 25 per cent — plants could close once current model runs end. The source said further auto-specific negotiations will still be needed once broader free-trade talks begin.

The White House has publicly said Canada moved on three sectors, including dairy.

The U.S. had been pushing to change the rules on what dairy products can be sold into Canada tariff-free, and while talks continue, that change now looks likely.

LeBlanc told reporters after meeting with U.S. Trade Ambassador Jamieson Greer in Washington on Wednesday that the supply management system itself will remain “entirely intact.”

0:27 LeBlanc ‘confident’ supply management will remain intact in new Canada-US trade deal

Washington also pointed to movement on Canada’s retaliatory auto tariffs.

The biggest sticking point, the source said, is getting American alcohol back on provincial shelves, which could put the deal in jeopardy if not agreed to by the provinces and territories.

“The ask of the prime minister is for some of the procurement … rules that have been put in place by a number of provinces, specifically around American alcohol, that those would be changed in the near future,” said Saskatchewan Premier Scott Moe after premiers met virtually with Carney Wednesday afternoon.

Nova Scotia Premier Tim Houston told reporters after the meeting that Carney’s request “came directly out of the negotiating table.”

“We’ll work through that process,” he said, adding that it is something he would be willing to do “pending a final deal.”

“Whether Nova Scotians or whether Canadians will actually buy it when it gets back on the shelves, that’s a whole other discussion,” he added.

Other concessions may still surface as the deal is finalized. But the Liberals’ view is that this agreement, in whatever form it lands, is better for most provinces than the threatened 50 per cent tariffs. Ottawa may still offer additional help or policy changes to businesses or provinces uneasy with the deal according to the source.

The source says the government is planning to take a “pragmatic, persistent, and patient” approach over the coming days, before the new deadline of 12:01 a.m. Eastern on Saturday.

With less than two hours to go before the deadline for his new tariffs, Trump announced on Tuesday night that the levies had been paused for three days, claiming Canada and the U.S. had reached a deal.

“We had a very good conversation with the prime minister last night, and we’ve come to a deal with Canada,” Trump told reporters outside the White House earlier Wednesday.

He added, however, that the deal was still subject to final approval.

Carney then posted to social media that Canada “entered these discussions with the best overall trade terms” and was “moving towards” a deal.

“We are now moving towards an agreement that reinforces that Canadian advantage, including by securing the best terms in each of Canada’s most important strategic sectors and providing greater certainty about our future trading relationship,” Carney said.

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Washington has agreed to pause the tariffs until Friday while talks continue, Carney said.

The tariff pause came after Trump and Carney spoke over the phone on Tuesday afternoon, and Greer met with LeBlanc and Charette that day.

Trump said he paused his tariffs after Carney called him and Canada “gave us the points that we had to have.”

“Very fair deal for both,” he said.

Washington wants to have a “very nice relationship” with the Carney government as both sides “iron out the details of the deal,” Trump added.

“It’s going to be a wonderful deal, hopefully a wonderful deal for everybody,” he said.

Carney’s social media statement also congratulated LeBlanc and Greer for the “significant progress” made in the talks.

Greer told reporters in Washington that the U.S. is “very happy where we’ve ended up” in the trade talks.

“We feel confident that we’ve reached an agreement that will not only continue to protect American workers, American jobs, American supply chains, but really strengthen the North American economy,” Greer said.

The two sides have managed to “align on important things like economic security and digital security,” he said, adding that the new deal would eliminate some “irritants” that the U.S. has.

U.S. Ambassador to Canada Pete Hoekstra also hailed the “significant progress” and praised Trump’s “leadership and determination.”

“This news demonstrates what can be accomplished through focused, constructive engagement, and a shared commitment to economic prosperity,” he wrote on X. “We appreciate the efforts of our Canadian partners in making this possible.”

Trump’s social media post on Tuesday also revived talk of the Keystone XL oil pipeline, which was shelved after a 2021 executive order from then-U.S. President Joe Biden.

“The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!” Trump said, later posting an AI-generated image of him pulling the pipeline out of a grave.

The source, however, told Global News that the pipeline came up only once in negotiations and isn’t seen as a major item.

NDP Leader Avi Lewis said while he awaits more details, Canada should not offer too many concessions to Washington, including on the pipeline.

“Protecting Canadian workers without granting further unilateral concessions is essential. And the Keystone XL pipeline is a concession that makes no sense whatsoever – for our economy, our sovereignty, or the climate,” he said.

The Canadian dairy industry came into focus on Wednesday, with questions around what kind of concessions Ottawa would offer on that front.

Canada’s “tariffs” on U.S. farmers will be “non-existent” after this deal and will be “totally eviscerated,” Trump said.

“Our farmers are going to be thrilled, our manufacturers are going be thrilled,” he said.

Canada should not give the U.S. any “unilateral concessions” in the dairy sector, Conservative Leader Pierre Poilievre said.

“We believe that the United State spends tens, if not hundreds of billions of dollars in subsidies to its farmers, which put our producers at a competitive disadvantage,” Poilievre told reporters Wednesday.

2:33 Poilievre tells Carney: Trade deal with Trump shouldn’t include any “unilateral concessions”

The Bloc Quebecois “will not accept any concessions on supply management,” Bloc Leader Yves-François Blanchet said.

Supply management is “essential for thousands of Quebec family businesses,” Blanchet said in a statement in French.

Last week, the Dairy Farmers of Canada and the Dairy Processors Association of Canada called on the federal government to protect Canada’s dairy sector.

“We are concerned about additional concessions after already being forced to concede significant market access through successive trade agreements, including CUSMA,” David Weins, president of Dairy Farmers of Canada said.

Supply management, which Canada uses in the dairy, poultry and egg sectors, has been a frequent target of criticism from Trump throughout his threats of tariffs and claims that Canada is “ripping us off.”

Canada uses a quota system that allows a set amount of some foreign dairy products into the country, and high tariffs only apply if countries try to exceed that allowed quota coming into Canada.

Canada’s supply management system, which dates back to the 1970s, has restricted foreign access to the Canadian dairy market in order to protect domestic producers and set quality standards for products.

Carney vowed in the 2025 Liberal election platform that he will “keep Canada’s supply management off the table in any negotiations with the U.S.”

The United Steelworkers Union called on the Carney government to “hold the line for Canadian workers and jobs.”

“Canada should keep negotiating from a position of strength. No deal is better than a bad deal that sacrifices Canadian workers, jobs or key industries,” said Marty Warren, national director of United Steelworkers.

Trump’s pause on his proposed 50 per cent tariffs against Canada brings “relief” for businesses, but the uncertainty over the trade relationship continues, some industry groups said.

“Let’s be clear: the tariff delay provides relief on both sides of the border. Businesses may not be closing up shop with this news, but an extension doesn’t bring the certainty that a signed interim deal would,” said Candaice Lang, president and CEO of the Canadian Chamber of Commerce in a statement.

Canadian businesses need stability, Lang said.

“We know that stability is in short supply and businesses will take any ounce they can get. This limbo state is not anyone’s preferred outcome — time is of the essence,” she said.

The removal of tariffs would be a step in “the right direction,” said Dan Kelly, president of the Canadian Federation of Independent Business, in a statement.

“But we need to see if progress was made on the existing sectoral tariffs (steel, aluminum, lumber, autos) to fully evaluate any overall interim deal,” Kelly added.

The news of the pause is “welcome”, but the threat of tariffs and uncertainty are “damaging,” said Dennis Darby, president and CEO of Canadian Manufacturers and Exporters.

“Businesses cannot confidently make long-term decisions about production, hiring, technology adoption and capital investment without knowing the conditions under which they will trade with their largest market,” Darby said.

“Delay may buy time, but it does not remove the damage caused by uncertainty,” he added.

Negotiators should not only use the next three days to prevent the new 50 per cent tariffs but also negotiate an end to the sectoral tariffs on steel, aluminum, lumber, autos and auto parts, he added.

While sectoral tariffs on Canadian lumber is a major sticking point in the negotiations, reducing barriers would “strengthen businesses on both sides of the border,” the Forest Products Association of Canada said.

“Canada and the United States share a deeply integrated forest-products market, and greater certainty would benefit workers, communities and customers across North America,” the group said.

4:27 Canada-U.S. trade deal: What comes next?

The Distilled Spirits Council of the United States said the provincial alcohol boycotts has caused exports of American spirits to drop by more than 70 per cent.

“As discussions continue over the next few days, we encourage leaders on both sides of the border to reach a negotiated solution that gets American spirits back on retail shelves in all Canadian provinces and returns the spirits sector to a zero-for-zero tariff framework,” said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, after Trump’s announcement.

The odds of securing a comprehensive trade deal before the U.S. midterm elections in November went up after Tuesday’s developments, said Scotiabank economist Derek Holt.

“If a deal that extends CUSMA and lowers uncertainty in a meaningful way were to be achieved, then it would be positive for Canadian economic growth and negligible for US growth,” Holt said in a note.

“It would buoy market and business sentiment toward Canada. It could put at ease consumer worries,” he added.

The Canadian dollar appreciated slightly against the U.S. dollar following Trump’s announcement.