Trade negotiations can stop without political contact going silent. That is the message Ottawa is sending after Canada-U.S. Trade Minister Dominic LeBlanc said Canadian and American officials are still speaking even though no formal negotiations are underway and no Washington meetings are scheduled. The distinction matters because the relationship has deteriorated sharply since Prime Minister Mark Carney suspended talks on August 21, followed by new U.S. tariffs, Canadian retaliation and fresh U.S. import restrictions.
For Ottawa, keeping the line open is not the same as accepting Washington’s terms. It is a way to preserve the possibility of a deal while Canada strengthens its position at home, diversifies trade and prepares for the next stage of the CUSMA review. The immediate question is no longer whether the dispute is serious. It is whether informal contact can become formal bargaining again before the costs deepen.
Talking Without Negotiating
LeBlanc’s latest message is carefully calibrated: Canada is not back at the negotiating table, but the relationship with Washington has not gone dark. Speaking during the Liberal cabinet retreat in Banff, he said he has spoken several times with U.S. Trade Representative Jamieson Greer and remains in occasional contact with Commerce Secretary Howard Lutnick. At the same time, LeBlanc said he has no meetings scheduled in Washington and has not met Greer since the August talks were suspended.
That difference between communication and negotiation is more than semantics. Formal talks usually involve a mandate, scheduled meetings, negotiating teams and concrete proposals moving back and forth. What exists now is closer to political maintenance: keeping channels open so neither side is starting from zero if conditions change. LeBlanc framed that as practical preparation for a possible agreement that respects Canadian sovereignty and serves the national interest. It also gives both governments room to speak without publicly conceding that pressure has forced them back to the table.
How the August Deal Fell Apart
Only weeks ago, Ottawa was describing the talks very differently. On August 18, Carney said Canada and the United States had made substantial progress, and Washington temporarily delayed its threatened 50 per cent Section 338 tariffs while negotiations continued. By August 21, that optimism had collapsed. Carney suspended the talks, recalled Canada’s negotiators and said last-minute changes in the U.S. proposal were unfair, uneconomic and raised doubts about whether any agreement would be reliable.
Washington tells the breakdown differently. U.S. Trade Representative Jamieson Greer has said Canada walked away from a near-final agreement that would have delivered significant benefits, and the Trump administration has portrayed Canada’s subsequent retaliation as the reason for further U.S. measures. The disagreement matters because it shapes the conditions for restarting talks. Ottawa wants a deal it can present as protecting sovereignty and strategic industries. Washington wants Canada to address what it describes as discriminatory barriers. Until those competing narratives produce a workable middle ground, renewed contact may remain informal.
Tariffs Have Raised the Price of Failure
The cost of the breakdown is no longer hypothetical. After the August talks failed, the United States imposed 50 per cent tariffs on roughly C$27.6 billion of Canadian goods. Canada responded with matching countermeasures that took effect September 8, applying tariffs of 15, 25 and 50 per cent to C$27.6 billion of U.S. imports. Ottawa targeted sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics.
Washington escalated again the same day. President Donald Trump signed proclamations that will bar certain Canadian alcohol, dairy products and motor-vehicle-related goods from entering the United States later in September, while USTR also said the administration was moving to remove tens of billions of dollars in Canadian-origin products from federal procurement schedules. The measures are targeted rather than a blanket closure of the border, but they deepen uncertainty for businesses that had hoped August would produce a stabilizing agreement. Every additional tariff or import ban also creates another issue that a future negotiating round would have to unwind.
Why the Open Phone Lines Still Matter
There is a human dimension to the diplomatic maintenance that can be easy to miss in a tariff fight. LeBlanc said he sent Lutnick a personal message on the 25th anniversary of the September 11 attacks, noting that the U.S. commerce secretary lost his brother Gary in the World Trade Center. That was not a trade negotiation, but it showed that personal relationships between senior officials have survived a period of unusually hostile economic policy.
Carney has also said he remains in regular contact with Trump and had spoken with him in recent days, even though those conversations did not amount to a resumption of trade talks. For governments, that kind of contact can create a channel for de-escalation when formal processes are frozen. It also allows officials to separate trade disputes from other files such as defence, security and geopolitics. Ottawa’s calculation appears to be that maintaining access is strategically useful even while rejecting current U.S. demands. Communication cannot solve the dispute by itself, but a complete breakdown in contact would make any later solution harder.
CUSMA Is Still Alive, but the Clock Has Changed
The bilateral fight is unfolding alongside a second process: the future of CUSMA. The agreement did not expire when the United States declined to extend it during the July 1 joint review. Under Article 34.7, CUSMA remains in force through 2036 unless the parties take other steps, but the failure to secure unanimous agreement on a new 16-year extension triggers annual joint reviews until the three countries agree to extend it or the existing term runs out.
Canada and Mexico supported renewal in July, while the United States did not. That means businesses still operate under CUSMA rules today, but they face a longer period of policy uncertainty than they would have if all three governments had immediately extended the pact. Ottawa has repeatedly emphasized that CUSMA continues to provide market access and can still be renewed at any time. The practical challenge is that bilateral tariff disputes over steel, aluminum, autos, dairy and other sectors are now colliding with the broader review of the continental trade framework itself.
Mexico’s Separate Track Adds Pressure
Canada is not negotiating in a vacuum. Mexico and the United States have continued a structured series of bilateral rounds tied to the CUSMA review, with talks covering automobiles, steel and aluminum, agriculture, labour, economic security and rules of origin. USTR said after the July round that the two sides planned another meeting in Washington in September. Reuters reported on September 11 that Mexico and Washington were accelerating efforts toward a bilateral trade understanding before the U.S. midterm elections.
That creates an uncomfortable comparison for Ottawa. If Mexico secures tariff relief or new sectoral terms while Canada remains outside formal negotiations, Canadian exporters could worry about losing relative access in the U.S. market. LeBlanc has said Canada continues talking with Mexican counterparts and welcomed signs from President Claudia Sheinbaum that the three countries ultimately benefit from working together. Still, Mexico’s progress gives Washington another source of leverage. Canada’s challenge is to avoid being isolated without rushing into an agreement it believes would weaken its economic or political sovereignty.
The Economic Relationship Is Too Large to Ignore
The political rhetoric is heated, but the underlying commercial relationship remains enormous. Global Affairs Canada says Canada and the United States exchanged nearly C$3.5 billion in goods and services every day in 2025. Statistics Canada reported that 71.7 per cent of Canadian merchandise exports still went to the United States that year, even after the U.S. share fell from 75.9 per cent in 2024 as exporters expanded into other markets.
The latest monthly data reinforce both dependence and gradual change. In July 2026, Canada exported about C$50.5 billion in goods to the United States, although that was down 6.6 per cent from June. Exports to countries other than the United States rose to a record C$25.6 billion, accounting for 33.7 per cent of total exports that month. Those numbers explain Ottawa’s two-track strategy. Diversification can reduce vulnerability over time, but the U.S. market is still too large and too integrated to replace quickly. A workable U.S. relationship therefore remains economically important even as Canada tries to make it less indispensable.
Autos and Steel Show Why Businesses Want Certainty
Some industries have far more exposure to the United States than the national averages suggest. Statistics Canada found that more than 93 per cent of Canadian motor-vehicle exports went to the U.S. in 2025. Its value-added analysis also estimated that U.S. demand supported about 76.4 per cent of payroll jobs in automobile and light-duty vehicle manufacturing in 2024, representing roughly 27,000 jobs. In iron and steel mills and ferro-alloy manufacturing, about 67 per cent of payroll jobs were tied to U.S. demand.
Those figures help explain why tariff policy quickly becomes a factory-floor issue. Automotive supply chains cross the border repeatedly, while steel and aluminum producers depend heavily on U.S. customers and downstream manufacturers. ISED trade data show Canadian automotive exports to the United States totalled about C$67.8 billion in 2025 across vehicle, body and parts manufacturing. For companies making investment decisions, uncertainty can be nearly as damaging as the tariff rate itself because plants, tooling and supplier contracts are planned years ahead. Informal political contact offers some hope, but businesses generally need durable rules, not just open phone lines.
Ottawa Is Building a Plan for a Longer Dispute
Ottawa is behaving as though the dispute may last. Alongside its September counter-tariffs, the federal government announced a C$7.5 billion package of new and expanded supports for workers and businesses. The measures include C$1.5 billion more for the Regional Tariff Response Initiative, C$500 million in new Business Development Bank liquidity, C$2 billion for a Canada Strong Diversification Fund and C$3.5 billion in rapid-response supports for workers and employers.
The strategy also rests on finding more customers outside the United States. Statistics Canada reported that Canadian merchandise exports to non-U.S. markets rose 17.2 per cent in 2025. The Bank of Canada’s second-quarter 2026 Business Outlook Survey found that some firms were already adapting production, shipping or customs arrangements and diversifying into new industries to reduce tariff exposure, although trade uncertainty continued to weigh on parts of the economy. The message from Ottawa is therefore broader than retaliation: negotiate if a fair deal becomes possible, but reduce the cost of waiting if it does not.
What Would Count as a Real Restart
The clearest sign that the trade talks are genuinely alive would not be another phone call. It would be a scheduled negotiating round, an agreed agenda and senior teams exchanging proposals again. LeBlanc’s statement that no Washington meetings are currently booked shows that Canada has not reached that point. Greer’s public comments this week also remain combative, with USTR continuing to blame Canada for leaving the August deal and defending the Trump administration’s new restrictions.
Still, neither government has closed the door completely. Carney has said Canada remains open to professional, respectful negotiations and believes a mutually beneficial agreement is possible, while LeBlanc says Ottawa wants to be ready if an acceptable deal emerges. For now, the most accurate description is a frozen negotiation with active political channels. That may sound like a narrow distinction, but in a dispute involving hundreds of billions of dollars in annual commerce and the future of CUSMA, it matters. The talks are not underway. They are also not beyond revival.
