After months of negotiations, Prime Minister Mark Carney’s top lieutenant left Washington on Friday without a deal, but remained confident that Canada’s trade pact with the U.S. and Mexico would mitigate the impact of Donald Trump’s escalating tariffs.
Canada-U.S. Trade Minister Dominic LeBlanc held a lengthy meeting with Commerce Secretary Howard Lutnick on Tuesday night after touching down in D.C. before moving on to other senior White House officials. None of that prevented Trump from raising Canada’s tariff rate to 35 percent from 25 percent on Thursday after the countries failed to reach a deal, News.Az reports citing Politico.
That leaves LeBlanc’s White House texting buddy on the back-burner for the time being.
“I would expect to talk to Sec. Lutnick on the phone next week,” LeBlanc told POLITICO Friday from the Canadian embassy in Washington. “There’s no meeting scheduled, but I exchanged text messages with him yesterday.”
Despite Trump’s increased tariff, LeBlanc, as well as Carney, noted the United States-Mexico-Canada Agreement extends broad protection to most — but certainly not all — Canadian industries.
“The president’s respect of the USMCA application puts Canada in a favorable position,” said LeBlanc, whose immediate priority is working with Carney to help Canadian workers affected by the tariffs.
Trump’s tariff hike still hits goods that are not covered by the USMCA. The Bank of Canada forecast this week that up to 95 percent of Canadian exports could qualify for exemptions under that agreement. Meanwhile, the share of Canadian companies claiming tariff exemptions has soared.
Before boarding a flight back to his New Brunswick home, LeBlanc said that leaves “Canada in a favorable position with respect to the overall tariff rate on our economy as compared to other trading partners.”
LeBlanc was in Washington with Carney’s chief of staff, Marc-André Blanchard, and Kirsten Hillman, Canada’s U.S. envoy and chief negotiator, for the homestretch of talks ahead of Trump’s self-imposed Aug. 1 trade deadline.
When no deal was reached, Trump signed an executive order justifying the hike in tariffs as a response to the illicit movement of fentanyl over Canada’s land border into the U.S.
In fact, U.S. data shows that fentanyl accounts for less than 1 percent of the amount of the illicit drug that is smuggled into the U.S. Canada has spent C$1.3 billion on a border-security package that includes drones, helicopters and additional law enforcement personnel — points LeBlanc said he repeatedly reinforced in his interactions this week.
“We were obviously disappointed by the president’s decision,” LeBlanc said. “It doesn’t mean that we can’t continue to constructively engage with our American counterparts.”
Candace Laing, the CEO of the Canadian Chamber of Commerce, called the White House fact sheet on the tariffs “a fact-less sheet” on the fentanyl emergency. “More fact-less tariff turbulence does not advance North American economic security.”
LeBlanc, meanwhile, took a more conciliatory approach, saying there is “zero daylight” between Ottawa and Washington’s commitment to tackling the opioid crisis.
He’ll turn his attention to working with Carney on domestic initiatives, “focused on the work I have to do around building one Canadian economy and the major projects.”
He and Carney will consult Métis leaders in Ottawa next week as the government moves to expedite the approval of “nation-building projects,” which could include energy corridors, roads, mines and other infrastructure.
LeBlanc acknowledged Canada’s steel and aluminum exports are still taking a 50 percent tariff hit under a separate national security law, and that non-USMCA-protected autos face a 25 percent levy.
“We are very much shifting our focus to what we need to do to support those sectors of the economy hit by the [Section] 232 tariffs, like the steel and aluminum sector, like automobiles,” he said, referring to Trump’s use of the Trade Expansion Act to justify those levies on national security grounds.
He said Carney will be announcing support measures for those workers and businesses, “like we did with steel a couple of weeks ago.”
LeBlanc also met senior Mexican officials in Washington this past week, and said they discussed starting talks as early as the fall on the review of the USMCA — a process scheduled for next year under the pact’s sunset clause.
Mexico managed to secure a 90-day extension to allow more time to reach a longer-term agreement with the U.S.
“We continue to believe that the USMCA is a very valuable instrument to build the economies of all three countries,” LeBlanc said.
