Countdown begins as Canada races to avoid new 50% U.S. tariffs

By Tahani Elghazaly
Published August 18, 2026

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Canada and the United States have entered the final hours of intensive trade negotiations ahead of a 12:01 a.m. Wednesday, August 19 deadline, when Washington is scheduled to impose tariffs of 50% on roughly $20 billion worth of Canadian goods unless the two sides reach an agreement or last-minute truce.

The new duties would cover a range of Canadian products including wine, furniture, dairy, cement, clothing, fishing equipment and hockey goods. Unlike many previous measures, the tariffs could also apply to some products that currently receive preferential treatment under the U.S.-Mexico-Canada trade agreement.

Talks intensified in recent days, with Canada-U.S. Trade Minister Dominic LeBlanc and chief negotiator Janice Charette holding repeated meetings with U.S. officials. Prime Minister Mark Carney also spoke with U.S. President Donald Trump on Monday about the negotiations, describing the discussions as intense and delicate.

Key disputes include U.S. tariffs on Canadian autos, steel, aluminum and softwood lumber, as well as U.S. concerns over Canada's dairy import quotas and provincial restrictions on American liquor. The two sides are also discussing a possible reduction in existing auto tariffs from 25% to 15%, although they remain divided over how North American vehicle content would be treated.

The tariffs were imposed under Section 338 of the U.S. Tariff Act of 1930, which allows duties of up to 50% against countries deemed to discriminate against American goods. The targeted products represent about 5.2% of total U.S. imports from Canada, but individual industries and smaller exporters could face much greater disruption.

Both governments have strong incentives to find an off-ramp before the deadline. About 72% of Canadian goods exports go to the United States, while higher tariffs could also raise costs for U.S. importers and consumers.