Canada, U.S. discussing potential tariff exemptions after White House prompts trade chaos
Washington announces temporary relief for carmakers
Prime Minister Justin Trudeau and his U.S. counterpart spoke by phone Wednesday about the ongoing trade war and their senior officials have been in constant contact throughout the day as both sides discuss a deal to temporarily lift all tariffs or possibly negotiate carve-outs for certain sectors.
Canadian officials have described the situation as fluid, unpredictable and chaotic.
After President Donald Trump unilaterally granted an exemption to Canadian-made cars earlier today, there's a possibility further tariff exemptions could be announced at some point but there are no firm guarantees, officials said.
The president's advisers have suggested at different points over the last day that there could be a compromise on tariffs, only to say later that tariffs will still apply but maybe at a lower rate.
Canada is trying to get Trump to back down from his plan to effectively torpedo free trade between the two countries. The president's 25 per cent levy on virtually all Canadian goods has rattled markets and consumer confidence on both sides of the border.
Wednesday's call was the first time Trudeau and Trump had spoken since the president launched the trade war yesterday.
A senior government official told CBC News that the call lasted 50 minutes and Vice-President JD Vance and U.S. Commerce Secretary Howard Lutnick were also on the line.
Another senior government official said the U.S. proposed dropping some — not all — of its tariffs if Canada pulled its retaliation, which is tariffs on $30 billion worth of American goods right away before rising to $155 billion in three weeks' time. The provinces are also pursuing their own countermeasures.
Trudeau has said no to these offers and stressed that Canada would only drop its retaliation if the U.S. drops all of its tariffs, the official said.
Speaking to a business audience in Toronto, Foreign Affairs Minister Mélanie Joly described Trump as being the only meaningful "decision-maker" in the U.S. federal government right now.
"He's the only one. And we need to be able to address that reality," Joly said.
She said the current situation is a "psychodrama" that could drag on for months.
It's a message Ontario Premier Doug Ford echoed Wednesday: "There's one person that's causing this problem and that's President Trump."
Finance Minister Dominic LeBlanc and Lutnick have been exchanging messages all day, senior government officials told CBC News.
They are acting as the crucial go-betweens, hammering out the finer details of a possible deal to lift some tariffs. But government officials stress it could all collapse.
Lutnick has stressed in media interviews that there will likely still be tariffs even if the two sides cut some sort of deal on certain industries.
In one interview with Fox News, Lutnick said the president may land "somewhere in the middle" because Mexico and Canada are "trying their best," suggesting the U.S. tariff rate may be lower than the current 25 per cent.
"We're not interested in meeting in the middle," LeBlanc said in an interview with CBC Radio's The Current Wednesday morning.
But LeBlanc said Canada's retaliatory tariffs could be lifted if the U.S. shows some goodwill.
"If the Americans want to talk to us in a constructive way about how we could lift the tariffs, remove them and get back to building an economy that works for both countries, we can," he said.
Canada is trying to stir up anti-tariff sentiment in the U.S. by convincing allies in Washington and the broader American public that Trump's trade action is a form of self-sabotage that will cost consumers and put jobs at risk.
"These tariffs are completely unjustified and unjustifiable," Joly said, adding Trump's claims that these latest tariffs are linked to some sort of fentanyl crisis fuelled by Canada is bogus.
Joly said building up political pressure on Trump is one way to get him to back down.
She said Canada has cards to play, including non-tariff measures like holding back critical goods or imposing export taxes.
She pointed to American dependence on Canadian uranium that powers nuclear power plants across the U.S. as a potential vulnerability to exploit, if necessary.
"We are stronger than some of us may think," she said.
Joly said she spoke to U.S. Secretary of State Marco Rubio today but she stressed this isn't a trade war that will be solved by ministers and cabinet secretaries, no matter how senior they are.
"The negotiations are continuing," she said. "But at the end of the day only President Trump and Prime Minister Trudeau will get to a deal."
Automakers get 1-month reprieve
After Trump got a phone call from concerned American carmakers this morning, he moved to exempt autos from his tariffs until at least April — a sign that the White House is willing to make critical policy decisions on the fly.
Karoline Leavitt, the White House press secretary, said Wednesday afternoon that Trump decided to "give a one-month exemption on any autos coming through USMCA," the trilateral trade deal that Trump signed in his first term, known in Canada as CUSMA.
"Reciprocal tariffs will still go into effect on April 2," Leavitt said, referring to Trump's plan to impose even more tariffs next month on countries he thinks are ripping off the U.S.
To add to the messiness, however, Vance said at a news conference Wednesday afternoon that the administration is not interested in any more carve-outs and it wants the tariffs to apply broadly.
He said the only way for companies to get an exemption is to pick up and move to the United States.
"Invest in America. That is how you will avoid being penalized by these tariffs," he said.
In a social media post after the leaders' call, Trump said he told Trudeau that Canada's work to tamp down on fentanyl was "not good enough."
The U.S. government's own data shows Canada is not a significant source of illegal fentantyl with less than 20 kilograms of the drug seized at the northern border last year. A $1.3-billion plan launched by Canada last year has led to steep declines so far this year, according to data from agencies on both sides of the border.
Those agencies report that Canadian border officials actually captured more drugs coming in from the U.S. last year than what their American counterparts caught going south.
Leavitt added that Canada has made the U.S. a "dumping ground not just for illegal aliens but fentanyl" even though U.S. Customs and Border Protection data shows far more fentanyl — about 315 kilograms — came into U.S. coastal ports compared to what was seized at the 49th parallel last year.
When a reporter pressed Leavitt on the relatively small amount of fentanyl coming in from Canada, she said fact-checking the president's claims is "a little disrespectful for the families in this country who have lost loved ones at the hands of this deadly poison."
Trump puzzled about federal election
Despite his gripes, Trump said the call with Trudeau ended in a "somewhat friendly manner."
Trump said he was puzzled about why Trudeau couldn't say when the next federal election would be, saying it "made me curious, like, what's going on here?"
Trump said he then thought it might be part of a power grab. "I then realized he is trying to use this issue to stay in power. Good luck Justin!" he said.
There's a simple explanation for why the prime minister couldn't say when that vote will happen — it isn't Trudeau's decision to make.
The choice of when to go to the polls will fall to his successor, who will be named at Sunday's Liberal leadership event.
In his address to Congress last night, Trump doubled down on the value of tariffs, including on allies like Canada.
"Tariffs are about making America rich again and making America great again, and it is happening and it will happen rather quickly. There will be a little disturbance, but we are OK with that," he said.
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With files from CBC's Katie Simpson, Rosemary Barton
