LILLEY: Draft trade deal with U.S. hammered out amid 'intensive discussions'

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There is a draft, high-level proposal on a new trade deal between Ottawa and Washington, according to multiple sources. The question now is whether political leaders in both countries can get it over the finish line.

The hope, especially in Ottawa, is to have an agreement of some sort in place before the G7 meetings begin in Kananaskis, Alta., on June 15. 

The proposal would see both countries agree in broad strokes on ways to move forward in the trade relationship. According to sources, highly contentious issues like Canada’s supply management system for dairy and the digital services tax that is opposed by all sides in Washington would be put off into the future. 

Prime Minister Mark Carney was clear in denouncing the increased tariffs on steel and aluminum, calling them illegal and unjustified. But he, like his cabinet ministers on Wednesday, didn’t ramp up the rhetoric against the Americans. Carney even spoke about the ongoing discussions on the trade front. 

“We are in intensive discussions right now with the Americans on the trading relationship,” Carney told reporters ahead of his cabinet meeting. 

“Those discussions are progressing.” 

During question period on Wednesday afternoon, Carney repeated his comments under questioning from the opposition Conservatives. 

“We are in intensive negotiations with the Americans and, in parallel, preparing reprisals if those negotiations do not succeed,” Carney said. 

Let me translate that for you: Carney isn’t slapping a 50% counter-tariff on U.S. steel and aluminum imports because a deal is within reach. As Carney noted, the increase in steel and aluminum tariffs from 25% to 50% was applied globally; it wasn’t just aimed at Canada, so to respond with counter-tariffs now could jeopardize those talks. 

In response to a question from the Bloc Quebecois, Carney said the talks were at a delicate point. 

Dominic LeBlanc, Carney’s minister of intergovernmental affairs and point man on the talks with the Donald Trump administration, was in Washington Tuesday meeting with his U.S. counterparts. The discussions have been ongoing since Trump was sworn into office and have recently intensified with the hope of announcing a deal within the next week to 10 days. 

What we can expect is an announcement that Canada will increase its defence spending, including potential participation in the Golden Dome missile defence system. We should expect the government to show that border security will be a priority and there will be action on fentanyl. 

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All of those are things that Carney has spoken about to some degree in the past. 

What will be interesting to see is whether the “projects of national interest” that he has been speaking to premiers about are part of the deal. Will Ontario’s Ring of Fire, a source of critical minerals, work its way into a deal that sees the Americans as a preferred customer? 

We already know that the Americans are anxious for us to see projects like Grays Bay Port in Nunavut developed. Giving that project a green light as part of a trade negotiation could be part of the package. 

What we know for sure is this high-level proposal is not a full-scale renegotiation of the Canada-U.S.-Mexico Agreement. That would come at a later date and while the Canadian side is pushing for a deal, the Americans want something short and simple for now with full negotiations to come later. 

According to multiple sources, that doesn’t sit well with Canada’s top diplomat in Washington, Kristen Hillman, who is “getting into the weeds” and trying to solve everything at once. If the Americans are willing to come to an agreement of sorts at a high level and lift the tariffs while a full renegotiation of CUSMA happens, the Carney government should take it. 

It’s true that Trump can be erratic and could change his mind at a later date, but if a deal is on the table, we should take it.