Carney Walks a Political Tightrope as US Trade Talks Approach Deadline

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‘What’s the Alternative?’

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It’s far from clear whether Trump is willing to give significant ground on the Section 232 levies — or whether, in the longer run, his administration will even consider renewing the US-Mexico-Canada Agreement. That puts Carney in a bind: How far can he go in granting concessions if US tariffs are staying in place permanently?

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“This is going to come down to the US tariffs on steel, aluminum, and automobiles,” said Brian Clow, who played a major role for Canada in US trade negotiations under Carney’s predecessor, Justin Trudeau.

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“The 232s have to get close to zero, especially for automobile trade where the margins are so low,” he said. “If the US isn’t willing to significantly lower the 232 tariffs, the provinces won’t put alcohol back on shelves. If alcohol isn’t back on shelves, the US won’t finalize a deal.”

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Carney, 61, and his team have optimistically seen next week’s deadline as an opportunity to finally get the comprehensive tariff-reduction deal with Trump they’ve been seeking for more than a year. But the prime minister has limited room to maneuver. 

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The liquor bans, imposed by provincial governments after Trump’s initial round of tariffs in early 2025, have done major harm to US exporters of wine, whiskey and other products. Canadian imports of American alcoholic beverages plunged 81% in a year, according to the White House. 

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Carney can try to persuade provincial leaders on booze, but he can’t order them to. And each province has its own grievances with the US. 

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For Ontario, Canada’s manufacturing heartland, a deal would have to include tariff relief on steel and autos to win over Premier Doug Ford. The premier’s office didn’t respond to a request for comment.

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In British Columbia, with its massive forestry industry, Premier David Eby’s priority is getting duties lowered on softwood lumber — though it appears lumber won’t be part of an initial deal, some of the people said. 

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Eby’s office declined to comment. Recently, he said “there is not a chance in hell” US alcohol will go back on shelves in BC. “The idea of the president, that he can bully us into whatever he wishes, is incorrect.” 

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And in Quebec, Premier Christine Fréchette will be looking for reduced tariffs on aluminum without giving away major concessions on dairy. A spokesperson for Fréchette said: “In the context of the ongoing trade war, the Premier continues to defend Quebec’s economic interests.”

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In other words, resolving the booze bans will necessitate a pact that’s palatable to policymakers across Canada of different political stripes. That’s yet another complication for Carney.

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“It underscores the difficulty of governing our country as a federation,” said Goldy Hyder, chief executive officer of the Business Council of Canada, which has been pushing Carney to get to a deal with Trump. “I think the prime minister has to carve out a place for doing what’s right for the country above all else.”

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A spokesperson for Dominic LeBlanc, Canada’s minister in charge of US trade, declined to comment. 

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Many business executives don’t want Carney to grant concessions too easily. A KPMG survey of hundreds of business leaders found about 70% said the Canadian government should take a tough stance in negotiations, using any leverage it has available with the country’s most important trading relationship on the line. 

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“If we are not tough, what’s the alternative? We’re going to concede and give everything that they’ve asked for without getting anything in return?” asked Joy Nott, a partner in KPMG’s trade and customs practice in Canada. “That would be seen as more negative.”