Midnight showdown looms as US and Canada meet to sidestep Trump’s tariff blitz

With the clock running down, Washington and Ottawa are scrambling through final talks aimed at blocking the scheduled 50% import taxes on roughly $20 billion (€17.2bn) in Canadian goods that would otherwise begin just after midnight Wednesday.

The threatened measures would hit a wide range of items, from hockey sticks to tongue depressors, if the two sides fail to strike an agreement beforehand.

Canadian Prime Minister Mark Carney told reporters Monday that talks are underway, calling them "very intense and delicate" while declining to discuss details in public.

Carney and Trump spoke by phone Monday afternoon, underscoring the last-minute push. The neighbours have sparred for decades over softwood lumber and dairy market access, yet remained steadfast allies.

The 5,525-mile border between the two countries stays undefended as nearly 330,000 people and $2 billion (€1.72bn) in goods cross daily, with over 800,000 Canadians living in the US.

US President Donald Trump’s hard-line approach represents a dramatic shift.

Trump has levied tariffs to lure manufacturing home and repeatedly floated the idea of Canada becoming "the 51st state".

Canadians are clearly frustrated. A petition to oust US Ambassador Pete Hoekstra, a Trump ally, has gathered nearly 218,000 signatures since 21 July, charging that he normalised annexation rhetoric.

Both sides chase an exit ramp

Nearly 72% of Canada’s goods exports headed to the US last year.

Analysts believe Washington may hesitate to impose steep new tariffs, paid first by US importers and then passed on to consumers, so close to the November midterms when voters already resent high living costs.

"I don’t think either side really wants these tariffs to come into effect," said Ryan Majerus, a former US trade official and partner at King & Spalding.

"There’s a pretty strong push on both sides to find an off ramp here," Majerus stated.

The US is pressing Canada to purchase more American military hardware, including F-35 fighters, join Trump’s "Golden Dome" missile-defence system, and open greater access to critical minerals that would lessen reliance on China.

Canada, in turn, seeks relief from existing US tariffs on steel, aluminium and softwood lumber, which Washington claims are unfairly subsidised.

Depression-era law becomes fresh leverage

US President Donald Trump reached back to the 1930 Tariff Act, infamous for worsening the Great Depression, to justify the 50% levies under Section 338.

That provision, never before used, lets a US president impose tariffs of up to 50% on nations deemed to discriminate against US businesses, with no investigation required and no expiration.

Trump alleges discrimination against American autos, alcohol, and cheese and remains angry that Canada (along with China) retaliated against his earlier tariffs. The threat also bolsters US leverage as the North American trade pact, the US-Mexico-Canada Agreement, is being renegotiated.

"You can’t renegotiate it with a massive trade war going on," noted Christopher Gundermann of the Center for Strategic and International Studies. Yet, domestic anger could constrain Carney.

Political scientist Daniel Béland of McGill University cautioned that Canada "cannot look like it is simply caving," warning that one-sided concessions risk a fierce backlash and signal weakness to future pressure.

Canada’s trade minister, Dominic LeBlanc, met US Trade Representative Jamieson Greer on Monday and said only that "the work is continuing."