Canada must end retaliation to avoid new tariffs, Greer says

By Brian Platt

(Bloomberg) — Canada needs to scrap its retaliatory trade measures against U.S. products to avoid new tariffs from the White House that are set to take effect next week, U.S. Trade Representative Jamieson Greer said.

Greer, speaking to reporters at the Iowa State Fair on Friday, emphasized that the U.S. wants Canadian provinces to reverse their bans on American alcohol sales, which were implemented last year after President Donald Trump put tariffs on steel, aluminum and autos. He also pointed to Canadian protectionism on dairy and procurement rules as issues that must be addressed.

“Any potential resolution has to include all of these, or a pathway forward for them,” Greer said. Trump’s latest tariff threat is specifically a response to Canadian retaliation, “so those are things that would have to be resolved.”

The two sides have held intensive talks in Washington ahead of the Aug. 19 deadline. That’s the date on which the U.S. has said it will impose 50% duties on an additional $20 billion worth of goods imported from Canada.

Greer described the talks as “constructive” and said they are addressing a large number of trade issues, including some that go back decades.

“For us, this is not a trade war. We have domestic supply chains we’re trying to protect and support,” Greer said. “If a country retaliates against us, we’re obviously not going to tolerate that. We’ll take action. My sense is the Canadians want to have a more conciliatory approach, but we’ll see.”

Senior officials from two of Canada’s provincial governments also weighed in on Friday.

Quebec Economy Minister Bernard Drainville told Radio-Canada there’s “space for discussion” on the allocation of dairy quotas to let U.S. producers sell to Canadian retailers, which has long been a bugbear of the U.S. government, but said that any concession would be contingent on the province receiving something in return.

“I think we can discuss it, but we can’t do it for free. There have to be gains elsewhere,” said Drainville, who warned that the threatened 50% U.S. tariffs would “cause a lot of damage” and must not take effect.

Canada has rules that limit the quantity of dairy products that can be imported from the U.S. before tariffs kick in. Those were changed during the negotiations that led to the Canada-U.S.-Mexico Agreement in Trump’s first term, giving U.S. farmers greater — but not unrestricted — access to the Canadian market.

The Canadian dairy sector is still governed by an overarching policy known as supply management, which also restricts how much domestic farmers can produce. Quebec Premier Christine Frechette said on social media on Thursday that there would be “no compromise” on that system. Prime Minister Mark Carney has previously said that changes to that policy are “not on the table.”

British Columbia Premier David Eby, who has also removed U.S. alcohol from shelves, said the issue of U.S. import taxes on his province’s large softwood lumber exports “needs to be addressed” and “we hope for resolution,” without outlining specific demands or conditions.

The U.S. and Canada have sparred over the lumber trade for about four decades, but the fight has escalated under Trump, who’s added tariffs and repeatedly said “we don’t need their lumber.”

Dominic LeBlanc, Canada’s minister responsible for U.S. trade, and Janice Charette, the country’s chief trade negotiator, remain in Washington and are scheduled to brief Canadian provincial leaders and a business advisory council later on Friday.

–With assistance from Thomas Seal and Nojoud Al Mallees.

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