Canada and the United States are talking again, but the latest signals from Washington make clear that reopening communication is not the same thing as returning to the old trade relationship. U.S. Trade Representative Jamieson Greer says technical discussions with Canada remain active and that Washington is open to reaching an agreement. At the same time, he says a handful of outstanding issues are particularly difficult and the U.S. is “not inclined to go to zero tariffs.”
That combination leaves businesses facing an unusual situation: negotiations are alive, yet the destination appears fundamentally different from the mostly tariff-free North American system Canada has spent decades building. Autos, metals, agricultural market access and retaliatory measures all remain part of a much larger dispute over what the next Canada-U.S. economic relationship should look like.
The Negotiating Channel Is Open Again
The most important immediate development is that communication has clearly resumed after the breakdown in negotiations during August. International Trade Minister Maninder Sidhu spoke with Greer on the sidelines of the G20 Trade Ministers’ Meeting in Milwaukee, while Greer said his principal Canadian counterpart remains Canada-U.S. Trade Minister Dominic LeBlanc, with whom he speaks frequently. Greer also confirmed that technical discussions between the two countries are continuing.
That is meaningful because Prime Minister Mark Carney suspended the previous negotiating process on August 21 after saying last-minute changes to the American proposal were unfair and economically unacceptable to Canada. The Milwaukee contact therefore represents evidence of continued engagement, rather than proof that the August dispute has been settled. Canada’s own G20 statement confirmed Sidhu met Greer among a long list of international counterparts, but Ottawa announced no new bilateral agreement or tariff breakthrough afterward.
Zero Tariffs Are No Longer Washington’s Starting Point
Greer’s clearest message may be his statement that the Trump administration is open to making a deal with Canada but is “not inclined to go to zero tariffs.” That wording matters because it suggests Washington is approaching negotiations from a fundamentally different starting position than Canada. It does not mean every Canadian export would necessarily face a duty, nor has the U.S. published a final Canada-wide tariff schedule tied to a future agreement. It does signal that complete tariff elimination is not Washington’s stated objective.
Ottawa had entered the previous round with a different goal. Carney said Canada wanted to preserve tariff-free U.S. access for the vast majority of Canadian businesses while securing substantial reductions in tariffs on strategically important industries. During the failed August negotiations, Canada was prepared to remove remaining retaliatory measures in areas such as steel, aluminum and autos if the U.S. substantially lowered its own tariffs. That gap between tariff reduction and tariff elimination now sits at the centre of the negotiations.
The ‘Difficult’ Issues Go Well Beyond One Tariff Rate
Greer has publicly described the remaining Canada files as a “handful of outstanding issues” that are difficult to resolve, but the latest Milwaukee remarks did not provide a definitive list of every item still being negotiated. Earlier rounds, however, provide a clear picture of the pressure points. In August, Greer specifically highlighted provincial restrictions on American alcohol, Canadian dairy policies and procurement rules when describing U.S. demands.
Canada has its own limits. During the August breakdown, Carney said Ottawa would consider administrative changes around supply management but would not change the system itself, existing U.S. quotas or applicable tariffs. He also said Canada would not make concessions affecting cultural policy or broader national sovereignty. Those positions explain why a deal can become progressively harder near the finish line: some remaining subjects involve domestic policies extending far beyond customs duties. The exact package currently under discussion has not been publicly released, so earlier negotiating demands should not automatically be treated as the final terms now on the table.
Autos Remain One of the Biggest Economic Pressure Points
Few industries illustrate the stakes better than automobiles. Before the August negotiations collapsed, Reuters reported that the U.S. was considering reducing its tariff on Canadian-built cars and light trucks from 25% to 15%, while Canada was seeking a reduction to 10%. The proposed arrangement never took effect. Disagreements also emerged over whether tariff relief would cover medium- and heavy-duty Canadian vehicles, an important issue for production planned at plants in Ontario.
After negotiations failed, President Donald Trump threatened to raise tariffs on Canadian cars, trucks and automotive parts to 50% beginning January 1, 2027. Greer’s latest comments did not remove that risk, with Canadian Press reporting that he did not rule out the threatened increase. For automakers, the problem extends beyond the headline tariff: vehicles assembled in North America rely on components, metals and production steps that can cross the Canada-U.S. border repeatedly before a finished vehicle reaches a dealership.
Steel and Aluminum Show the Real-World Cost of the Dispute
Metals remain another test of whether negotiations can produce meaningful sectoral relief. During August’s proposed agreement, Washington was considering cutting tariffs on Canadian steel and aluminum from 50% to 25%. Those reductions disappeared when the wider agreement fell apart. Canada subsequently expanded its own countermeasures, with certain U.S. steel and aluminum products now subject to Canadian tariffs of 25% or 50%, depending on the product.
The consequences are already visible outside government negotiating rooms. In late September, Stelco announced plans to idle cold-rolled and coated steel operations in Hamilton, potentially affecting up to 500 workers. Reuters reported that the company linked the decision to market disruption associated with U.S. tariffs, while its parent company, Cleveland-Cliffs, planned to concentrate more production at Stelco’s Nanticoke operation. For workers in an industrial city such as Hamilton, the trade dispute is therefore not an abstract argument over tariff percentages; it can directly affect shifts, production lines and employment decisions.
Retaliation Has Spread Into Everyday Products
The dispute has also expanded well beyond autos and heavy industry. On September 29, a U.S. ban covering nearly US$1 billion of selected Canadian imports took effect, according to the Associated Press. Products affected included alcoholic beverages, certain dairy goods and motorcycles. Those measures arrived just before Greer and Sidhu crossed paths at the G20 gathering, illustrating how negotiations and escalation can occur at the same time.
Canada has responded with substantial measures of its own. Effective September 8, Ottawa imposed tariffs of 15%, 25% and 50% on US$-origin goods corresponding to C$27.6 billion in imports. The federal government said the measures targeted products including steel, dairy, appliances, agricultural equipment, pulp and paper and electronics, while existing Canadian counter-tariffs on U.S. autos remained in place. For companies buying components or selling finished goods across the border, every additional measure can create another pricing, sourcing or inventory decision that must be reconsidered.
The CUSMA Review Is Becoming Part of the Bigger Story
The bilateral negotiations are happening against an even larger institutional backdrop. On July 1, Greer announced that the United States would not renew the United States-Mexico-Canada Agreement in its existing form during its scheduled joint review. Crucially, that did not terminate the agreement. USTR said CUSMA would remain in force while the countries continued working through outstanding issues, meaning businesses still operate within an agreement whose longer-term structure remains unsettled.
That process is already moving into another stage. On October 2, USTR opened a new consultation process ahead of a 2027 joint review and set January 12, 2027, as the deadline for public comments and requests to participate in a hearing. The result is effectively two overlapping conversations: the immediate effort to resolve current Canadian tariff disputes and the longer negotiation over North American trade rules. Any durable Canada-U.S. settlement will therefore have to be understood within a CUSMA relationship that Washington itself says needs further changes.
Canada Is Diversifying, but the U.S. Is Still Enormous
Ottawa’s response to repeated U.S. trade disruptions has increasingly emphasized diversification. Global Affairs Canada reported that Canadian exports to non-U.S. destinations increased 11.1% in 2025, while exports to the United States declined 3.7%. Non-U.S. markets accounted for 32.8% of Canadian goods and services exports, their largest share in more than four decades. Canada exported C$683.3 billion in goods and services to the United States during the year, however, demonstrating how large the relationship remains even after that decline.
The dependence is especially pronounced for physical goods. The U.S. still received roughly 72% of Canadian goods exports in 2025, compared with 53% of Canadian services exports. Sidhu used the Milwaukee meetings to push relationships with the European Union, India and other partners, while Greer argued that such markets cannot simply replace American demand. Canada’s diversification numbers show measurable progress, but the scale of U.S. commerce explains why reaching some form of workable bilateral arrangement remains economically significant.
Uncertainty Can Hurt Even Before Another Tariff Arrives
Businesses do not necessarily need a new tariff announcement to change their behaviour. The Bank of Canada has repeatedly identified U.S. trade policy and uncertainty surrounding the future of CUSMA as material economic risks. Its 2026 assessments found that companies exposed to tariffs were more cautious about investment, hiring and future sales, even as conditions improved among firms less directly affected by the dispute. The central bank has also noted that establishing new overseas customer and supplier relationships takes time.
Recent economic data underline why that uncertainty matters. Statistics Canada reported that real GDP was unchanged in July, with manufacturing output declining 0.9%, although August was preliminarily estimated to show renewed growth. Those figures cannot be attributed solely to trade policy—refinery outages and weakness in several other industries also played roles—but the new U.S. tariffs introduced later in August add another challenge for trade-sensitive manufacturers. Companies making multi-year decisions about factories or supply chains ultimately need to know not only today’s tariff, but whether it can be relied upon tomorrow.
The Next Breakthrough Will Need More Than Another Meeting
For now, the clearest conclusion is relatively narrow: Canada-U.S. negotiations are not dead. Greer says technical discussions continue, he remains in frequent contact with LeBlanc, and U.S. officials are still willing to consider an agreement. The Milwaukee meetings also restored visible high-level engagement after August’s collapse. But neither government has announced a comprehensive settlement, a detailed new tariff schedule or a timetable for concluding one.
That leaves several concrete developments worth watching rather than assuming a breakthrough is imminent: whether Washington proposes specific reductions in auto, steel or aluminum tariffs; whether the two sides narrow disagreements surrounding retaliation and market access; whether the threatened January 2027 automotive tariffs change; and how the next CUSMA review process develops. Greer’s message is therefore both encouraging and restrictive. Washington is still talking, but it is also openly signalling that any new trade relationship with Canada may involve tariffs that would once have been considered incompatible with the direction of North American free trade.
