U.S. Trade Chief Says Canada’s Sticking Points Are ‘Quite Difficult’ and Washington Is ‘Not Inclined’ to Go to Zero Tariff

35,000+ smart investors are already getting financial news, market signals, and macro shifts in the economy that could impact their money next with our FREE weekly newsletter. Get ahead of what the crowd finds out too late. Click Here to Subscribe for FREE.

Canada and the United States are talking again, but the latest message from Washington suggests that talking and closing a deal remain two very different things. U.S. Trade Representative Jamieson Greer said at the G20 trade ministers’ gathering in Milwaukee on October 1 that a “handful” of outstanding issues with Canada are “quite difficult to resolve.” He also said the Trump administration remains open to an agreement but is “not inclined to go to zero tariffs,” linking that position to Washington’s effort to bring more manufacturing back to the United States.

The comments arrive after an unusually turbulent stretch that included the collapse of negotiations in August, new 50% U.S. tariffs on selected Canadian goods, matching Canadian countermeasures and, most recently, targeted U.S. import bans. Technical discussions continue, but the gap now extends beyond individual tariff rates to a broader disagreement over how North American trade should work.

A Deal Is Still Possible, but the Starting Point Has Changed

Greer’s remarks matter because he did not describe Canada-U.S. negotiations as dead. He said technical discussions are continuing, identified Canada-U.S. Trade Minister Dominic LeBlanc as his main Canadian contact and said the two speak frequently. International Trade Minister Maninder Sidhu also held an informal discussion with Greer during the Milwaukee G20 meeting. Those contacts show that government-to-government communication has continued despite the suspension of formal negotiations in August.

What has changed is the apparent definition of a successful agreement. Canada entered the summer negotiations seeking to preserve tariff-free access for most Canadian business and significantly reduce U.S. tariffs affecting strategic sectors. Greer is now saying explicitly that Washington does not view zero tariffs as its objective. His explanation—that the United States is using trade policy partly to reshore production—suggests that tariffs are not being treated solely as temporary bargaining chips. That creates a structural gap: Ottawa wants predictable access to its largest market, while Washington is attaching greater value to maintaining incentives for production inside the United States.

The “Sticking Points” Cover Several Politically Sensitive Industries

Neither government has published a definitive negotiating text showing every unresolved demand, but their public statements make the principal areas of disagreement increasingly clear. The Trump administration has repeatedly targeted Canadian policies involving automobiles, dairy products and alcoholic beverages. Washington has characterized measures in those sectors as discriminatory against U.S. commerce. Those are U.S. government allegations; Canada disputes the broader characterization of its policies and argues that its countermeasures were responses to earlier U.S. trade restrictions.

Prime Minister Mark Carney provided unusually detailed insight into Canada’s negotiating position after talks broke down in August. He said Ottawa had been prepared to remove remaining retaliatory tariffs on steel, aluminum and autos if Washington substantially lowered its corresponding tariffs. Canada was also prepared to encourage provinces to return U.S. alcohol to store shelves and take administrative steps involving supply management. Carney said, however, that Canada would not change the supply-management system itself, its U.S. quotas or applicable tariffs. That helps explain why the remaining disputes can be small in number yet difficult to resolve: each touches politically and economically sensitive domestic policies.

Autos Remain One of the Highest-Stakes Pressure Points

Few Canadian industries illustrate the problem better than automobiles. Federal government figures say the auto sector supports more than 500,000 workers, contributes over C$16 billion annually to GDP and produced more than 1.2 million passenger vehicles in 2025. More than 90% of Canadian-built vehicles and roughly 60% of Canadian-made auto parts are exported to the United States. Production is deeply integrated, meaning a policy aimed at moving assembly or parts manufacturing across the border can have immediate consequences for factories and suppliers in Ontario and elsewhere.

Canadian-built vehicles have faced a U.S. tariff of 25% on their non-U.S. content since April 2025, while U.S. content in CUSMA-compliant vehicles has been exempted. President Donald Trump subsequently announced that tariffs affecting Canadian autos, trucks and parts could rise to 50% on January 1, 2027. When Greer was questioned in Milwaukee about that possibility, he did not rule it out. For manufacturers planning model allocation, tooling and investment years in advance, that uncertainty can matter almost as much as the current rate because plants compete internally for future production mandates.

The August Breakdown Changed the Negotiating Environment

Only weeks before Greer’s latest comments, the two governments appeared significantly closer to an agreement. On August 18, Carney said “substantial progress” had been made, and Washington postponed the scheduled implementation of new 50% tariffs until the end of August 21 while negotiations continued. Three days later, however, Carney suspended the talks, saying late changes in the U.S. terms were unfair, uneconomic and insufficient to meet Canada’s objectives.

Washington tells the episode differently. Greer subsequently said Canada had walked away from what the United States considered a near-final agreement offering especially favourable treatment. Those competing accounts are important because they demonstrate that the disagreement concerns not only specific tariff percentages but also what each government considered an acceptable overall bargain. After the talks ended, the U.S. measures took effect. Canada calculates that the new U.S. 50% tariffs covered C$27.6 billion worth of Canadian goods, while U.S. descriptions valued the affected trade at nearly US$20 billion. Ottawa responded with matching countermeasures rather than accepting the proposed terms.

The Dispute Has Escalated From Tariffs to Outright Import Bans

The September escalation demonstrated why the current dispute is different from an ordinary argument over tariff rates. On September 29, U.S. import bans took effect on selected Canadian alcoholic beverages, dairy-related products and motorcycles. Associated Press reporting put the affected trade at almost US$1 billion. White House proclamations confirm that certain Canadian alcohol and dairy products were excluded from importation rather than simply subjected to another duty.

The difference is substantial for individual companies. A high tariff may leave an exporter with the difficult choice of raising prices, absorbing part of the cost or shifting production. A ban can eliminate the transaction entirely. Canadian alcohol producers have been particularly exposed after years spent developing U.S. customers, while the measures also affect particular dairy and powersports products. Canada, meanwhile, implemented counter-tariffs of 15%, 25% and 50% on C$27.6 billion of U.S. imports on September 8, while retaining other existing countermeasures. That escalation leaves negotiators with more measures to unwind if a broader compromise eventually emerges.

CUSMA Is Still Operating—even Though Its Future Is Unresolved

The tariff fight is unfolding alongside another consequential process: the review of the Canada-United States-Mexico Agreement. The first mandatory joint review occurred on July 1, 2026. The United States declined at that stage to confirm an extension of CUSMA in its current form. That decision did not terminate the agreement. Under the treaty’s review mechanism, CUSMA remains in force while the parties continue considering its future.

The distinction matters because the July review was never an automatic expiration date. CUSMA entered into force in 2020 with a 16-year term, meaning it can remain operative until 2036 unless a country separately invokes the withdrawal provisions. Because all three governments did not agree to extend the agreement during the six-year review, the treaty provides for annual joint reviews for the remainder of the term unless an extension is subsequently approved. That gives Washington, Ottawa and Mexico repeated opportunities to negotiate changes, but it also extends uncertainty for businesses that had hoped the 2026 review would provide another long period of North American trade stability.

The Size of Canada-U.S. Trade Makes the Stakes Unusually High

Whatever the political temperature, the economic relationship remains enormous. U.S. Trade Representative data show that U.S. goods and services trade with Canada totalled an estimated US$872.3 billion in 2025. Goods alone accounted for about US$715.5 billion, with the United States exporting US$333.6 billion to Canada and importing US$381.9 billion. Canadian government figures, measured differently and in Canadian dollars, put two-way goods and services trade at almost C$3.5 billion every day in 2025.

Canada also remains far more dependent on the U.S. market than on any other single destination. Statistics Canada reported that 71.7% of Canadian merchandise exports went to the United States in 2025, although that was down noticeably from 75.9% in 2024. This concentration explains why Greer’s statement about Washington being unwilling to return to zero tariffs carries significance far beyond the industries directly mentioned in the negotiations. Even where CUSMA exemptions continue protecting most trade, decisions involving a comparatively narrow group of sectors can reverberate through transportation networks, suppliers, investment plans and communities built around cross-border commerce.

Canada Is Diversifying, but the U.S. Market Cannot Be Replaced Quickly

Ottawa has responded to the trade confrontation by accelerating efforts to sell Canadian products elsewhere. Statistics Canada says merchandise exports to countries other than the United States increased 17.2% in 2025, while total merchandise trade with non-U.S. countries climbed 14.3%, from C$484 billion to C$553 billion. Global Affairs Canada separately says exports of goods and services to non-U.S. markets increased by C$33 billion in 2025 compared with 2024.

Those numbers show genuine movement, but they do not eliminate Canada’s geographic and industrial connection to the United States. Roughly 72% of Canadian goods exports still went south of the border in 2025. Ottawa is therefore pursuing diversification and continued U.S. access simultaneously. Sidhu has advanced negotiations with India, ASEAN and the Philippines, while Canada has also discussed deeper economic relationships with Europe and Mercosur. The strategy can create additional outlets over time, especially for commodities, services and specialized manufactured goods. It cannot instantly reproduce the advantages of a huge market connected by road, rail, pipeline and decades of integrated supply chains.

Businesses Are Already Factoring Trade Uncertainty Into Their Decisions

The consequences are increasingly visible in business sentiment. Statistics Canada’s third-quarter Canadian Survey on Business Conditions found that 32.2% of businesses expected U.S. tariffs on Canadian imports to negatively affect them over the next 12 months. Manufacturing companies were substantially more exposed: 49.7% expected negative effects, compared with 47.3% in transportation and warehousing and 45.1% in wholesale trade. Those responses do not mean every company expects losses, but they show that trade policy is influencing planning well beyond firms that directly export finished goods.

Fresh manufacturing data provide another cautionary signal. The S&P Global Canada manufacturing PMI declined from 53.0 in August to 51.5 in September, remaining above the 50 level associated with expansion but recording its slowest growth in six months. Reuters reported that manufacturers cited trade friction alongside elevated energy costs, while confidence about future activity fell to a nine-month low. The Bank of Canada has separately identified the evolution of the U.S. trade relationship as a major risk, warning that prolonged uncertainty could weaken investment and household spending.

The Next Phase May Be About How Many Tariffs Come Down—not Whether They All Disappear

For now, the diplomatic channel remains open. Greer says he communicates frequently with LeBlanc, technical talks are continuing and Sidhu used the G20 gathering to raise trade uncertainty directly with his American counterpart. That is meaningfully different from having no negotiations at all. At the same time, Greer deliberately tempered expectations around Trump’s suggestion that an agreement might emerge within weeks, emphasizing the uncertainty around whether such a deal will materialize.

The practical question may therefore be shifting from whether Canada and the United States can recreate the broadly tariff-free relationship of earlier years to how much protection each side is willing to remove in individual sectors. Autos are especially important with the January 1, 2027 tariff threat approaching, while dairy, alcohol access and Canadian retaliatory measures remain part of Washington’s stated concerns. None of that precludes an agreement. It does indicate that any compromise would have to bridge fundamentally different objectives: Canada is seeking predictable access and substantially lower sectoral barriers, while Greer says Washington wants tariffs to remain part of a strategy aimed at reshoring production. The contacts continue; the definition of an acceptable deal remains the harder part.

This Options Discord Chat is The Real Deal

While the internet is scoured with trading chat rooms, many of which even charge upwards of thousands of dollars to join, this smaller options trading discord chatroom is the real deal and actually providing valuable trade setups, education, and community without the noise and spam of the larger more expensive rooms. With a incredibly low-cost monthly fee, Options Trading Club (click here to see their reviews) requires an application to join ensuring that every member is dedicated and serious about taking their trading to the next level. If you are looking for a change in your trading strategies, then click here to apply for a membership.