Canada could weaken its negotiating position if it makes further concessions to the U.S., says Diamond Isinger, a former special adviser on Canada-U.S. relations in the Prime Minister’s Office.
Her warning comes as Canada and the U.S. hold last-minute negotiations ahead of a Aug. 19 midnight deadline, which could see sweeping 50 per cent tariffs on roughly US$20 billion worth of Canadian goods including items like cement, hockey equipment, dairy products, wine, and clothing.
Isinger says while the U.S. has made it clear that it does not want Canada to retaliate, dropping retaliatory tariffs could encourage the Trump administration to push for more and “may actually lead to a worse outcome overall for Canada.”
“It’s a difficult strategic positioning to try to attain here,” says Isinger.
She said historically, the U.S. administration and the President typically respond with a positive reaction when they see positions of strength from partners like Canada.
“I still think that there is almost an equal chance of things working out versus not,” says Isinger.
Carney-Trump call a positive signal
Prime Minister Mark Carney’s office confirmed he spoke with U.S. President Donald Trump on Monday as negotiations continue, although few details about the conversation have been released.
Isinger describes the phone call between the two leaders as a positive development because Trump is a key decision maker in this situation.
“Ultimately, the President has to see any kind of tax or possible deal, approve it, and agree to it, because he can be the X factor in what could otherwise be a potentially agreeable situation going off the rails,” says Isinger.
Negotiations so far have largely involved Canada-U.S. Trade Minister Dominic LeBlanc and U.S. Trade Representative Jamieson Greer since Trump threatened and signed proclamations for the tariffs a month ago.
U.S. Commerce Secretary Howard Lutnick has also become more involved this week, which Isinger points out could be positive for Canada because of his existing relationship with LeBlanc.
“They have had a really useful channel of open communication between the two of them over the past, since last year when Dominic LeBlanc was actively involved both during the Trudeau government and now the Carney government,” says Isinger.
Major sticking points remain, however, including autos, dairy, lumber and other sectoral tariffs, she says.
She says a new agreement might ease sectoral tariffs, but it is unclear if it “would be to the satisfaction of Canadian industries, provinces, and others.” She says ultimately, they have the final say and decide whether to lift the bans they enacted to counter Trump’s steel, aluminum and auto tariffs.
Deal may just be temporary
Isinger says it is realistic to believe the two countries will sign an agreement now, but long-term trust will remain uncertain because the current talks lack clear parameters and exclude the full Canada-U.S.-Mexico Agreement (CUSMA) review.
“We can’t trust, necessarily, that in six months or a year we don’t find ourselves in a new cycle of trouble,” says Isinger.
She said one possibility is a limited agreement where Trump signs a memorandum of understanding or joint political statement, while the broader CUSMA review is dealt with separately.
She also points out that the upcoming U.S. midterm election will be another source of pressure for the U.S. administration.
“Americans are facing massive rising costs of living right now for numerous reasons, but also for the reasons of tariffs being imposed on countries like Canada,” says Isinger.
“That’s rising the cost of the goods that they need in their lives, in their workplaces, etc. and so that sort of pressure is going to continue to be felt by individuals who voice that to their elected officials, who will voice that to Washington.”
